Money matters. It plays a meaningful role in our lives. It allows us to experience many things. But money isn’t everything. As a financial advisor, I’ve talked to potential clients interested in financial planning who wonder how much money they need to save for retirement. For most, that’s not the right question. What if you spent your money with more purpose and used it for what matters most to you? Instead of asking how much money you need, try asking yourself different questions, such as the following:
- What kind of life do I want to live?
- What would my most fulfilling life look like?
- Am I spending my money on what matters most to me?
Asking these questions can help you better align your spending with your values. It can also help you live your life with more purpose.
At Apprise, we favor life planning over traditional financial planning. We view life planning as financial planning done right.
At its core, like a financial plan, a life plan provides a comprehensive strategy involving budgeting (or cash flow), investing, and saving money. Financial plans also reflect your short- and long-term goals as well as your values and lifestyle choices. A typical financial plan focuses on the following areas:
- Your Goals: Whether you want to start a family, buy a house, start a business, save for your child’s education, or go on a vacation every year, financial planning can help you achieve your goals.
- Debt Management: Debt can materially hamper your financial picture. Financial planning can help you manage it effectively.
- Asset Protection: You never know what might happen. Financial and estate planning can help you protect your assets and the financial security of you and your family.
- Retirement Plan: Retirement results in significant change. Financial planning can help you plan for it and allow you to save and invest enough funds to support your lifestyle.
Life Planning Goes Deeper
As noted above, life planning represents financial planning done right. A life plan is about more than money. It helps you create a roadmap for your future that aligns with your values and goals. It helps you determine what matters most to YOU! Having a life plan often allows you to live a healthier and more fulfilling life.
It’s Not All About the Money
Yes, money matters. There are some things you can’t do without it. That’s why you should invest and save for the future, so you don’t have to work your entire adult life. When it comes to investing, you can find countless stories talking about beating the stock market. Very few investors can do that with sustained success. This has led to more widespread use of a passive investment approach. Passive investing involves investing in funds that mimic an index.
Beating the market refers to the idea of achieving higher returns on your investments than the overall market. Investors who attempt to beat the market pick individual stocks, time the market, or follow the advice of financial experts. They rarely, if ever, experience consistent success.
Trying to beat a benchmark normally means holding riskier investments. Assuming more risk also means your portfolio will likely fall even more when the market declines. Big losses can jeopardize your future much more than failing to match a large gain. Think of it this way: If an investment you paid $100 for falls 40% to $60, it will have to increase by 67% to get back to even. That’s a big hurdle. An investment that falls 20% only needs to deliver a 25% gain to get back to even.
Consider a Diversified Portfolio
What if you decided to allocate your assets and hold a diversified portfolio? Your gains might not be as great, but your losses should be smaller. Plus, a diversified portfolio usually has less volatility than one that’s more concentrated. Diversification should help reduce the amount of fear you feel when the market declines. Emotions can cause us to sell out of fear and buy out of greed. I believe these are two of the worst things we can do as investors.
In addition, trying to beat the market can also be much more time-consuming. It takes longer to select your investments. You need to spend more time monitoring your investments. More time may be spent making changes to your portfolio, too. All of this can lead to increased stress and anxiety.
Holding a diversified portfolio should reduce your stress levels as well as the time spent managing the portfolio. It should also lower risk and volatility.
Living Your Desired Lifestyle
If you live your desired lifestyle, you prioritize your values, goals, and priorities over chasing investment returns. Your financial plan and spending should align with your lifestyle choices and priorities. You experience the benefits that come from enjoying the present while building wealth for the future.
Implementing a Life Planning Approach
When creating a financial plan, many advisors and their clients focus on financial goals and investments. This causes them to overlook the broader picture of their overall life goals and aspirations. But a successful financial plan should be about more than accumulating wealth. It should help you align your finances with what matters most to you.
Apprise has implemented a life-planning approach, and my business partner and I each hold the Registered Life Planner (RLP®) designation. While the full life-planning approach is relatively new for Apprise, those who have been through the process have provided positive feedback. It helps them get a clearer picture of both where they stand today and what their future can look like. It also helps them better understand what matters most to them.
Defining Life Planning
Life planning represents a comprehensive approach to financial planning. It still takes your financial goals into account. But it does much more. It also reflects your personal values, priorities, and aspirations. It aims to help you develop a clear understanding of what you want to achieve in life.
Taking a more holistic approach to financial planning through life planning allows you to create a financial plan that not only builds wealth. Your plan will also support your broader life goals.
At Apprise, we follow the Kinder Institute’s EVOKE process:
Exploration:
During the exploration meeting, the advisor provides you with an opportunity to speak about what matters most to you. The advisor’s role during this meeting is mostly to listen.
Vision:
During the vision meeting, the discussion centers on your response to the three Kinder questions. These can be summed up as follows:
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- Design Your Life.
- You Have Less Time.
- Today’s the Day.
Obstacles:
During the Obstacles meeting, the discussion focuses on what can keep you from living your most fulfilled life
Knowledge:
At this point, your advisor applies his or her knowledge to help you formalize your financial plan.
Execution:
Now it’s up to you to achieve the goals laid out in your life plan.
In this blog post, I discuss the life planning process in more detail. I also share my personal life plan.
An Ongoing Process
Life planning is not a one-and-done deal. It is an ongoing process requiring regular review and revision. Your life circumstances and priorities can change. This means your financial plan may need adjustments as well. For example, if you experience a job loss, marriage, divorce, or the death of a spouse, you will likely need to revise your financial plan to accommodate those changes. Any of those events could also be a good reason for you to work on your life plan if you don’t already have one.
In fact, at Apprise, we focus on working with women facing new beginnings. For women facing significant transitions, we know that it’s stressful trying to understand how to bridge the gap between where you are and where you want to go. We are committed to taking care of the financial aspects of these transitions so that our clients can focus on the lives they want. Our life planning process helps you determine what it is that you most want from your life. You are welcome to download our free e-book. It provides five steps to help women facing new beginnings flourish through life’s big changes.
Conclusion
In conclusion, life planning helps you to determine what matters most to you. It accomplishes this by taking a holistic approach that helps you identify your priorities and align your spending with your overall life goals and aspirations. Understanding your values, priorities, and life goals allows you to create a financial plan that supports the lifestyle you want to live. Remember, life planning is an ongoing process that requires regular review and revision to ensure that your financial plan continues to align with your changing life circumstances. With a life planning approach, you no longer need to think about building the biggest portfolio. Instead, you create a financial plan that does more than build your wealth. It also supports your broader life goals. If you would like to discuss your life plan with us, you can schedule a free, no-obligation call using this link.
For firm disclosures, see here: https://apprisewealth.com/disclosures/
Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.
