It amazes me how many people are looking for quick-fixes or jumping straight into the details of something without a clear impression of the big picture. Many of the questions I hear as a fee-only financial planner wouldn’t sound unusual or out of place to the average person. And honestly, they aren’t necessarily bad questions – within the right context. Questions like “Is $X a reasonable amount for this budget item?” or “Should I change to this other job?” or “How much do I need for retirement?”
Here’s the problem: Many people want to jump straight into these questions and skip all the other stuff. They think they just need an isolated answer to an isolated question. The problem is, with personal finance, and so many other things in life, it’s all connected.
Slow down, and take a moment
I like to start a coaching relationship with someone by spending just a little time to understand their dreams. Yes, really. Why? Well, people’s dreams should tie into their priorities, and their priorities need to be strongly reflected in their planning. To provide guidance about personal finance, careers, investing, retirement – these big, important topics – you need to frame the discussions all within the context of the overall vision.
If career advancement is a top priority to you, then you’re going to have different thoughts from someone else whose top priority is having children and raising a family. If fancy cars are important to you then you’ll have different milestones and goals than someone who really wants to focus on travel and experiences. If paying off debt is a priority for you, then you may have different planning tasks than someone who has a priority to buy a house soon.
It’s all about ruthless prioritization
I’m definitely not saying that these things can’t be tackled at the same time – often there will be overlapping progress toward multiple goals at once. You do need to be careful in that case not to get too scattered. When you are trying to do too many things at once, sometimes none of the things actually get completed to a level of satisfaction.
“If everything is a top priority, then nothing is.” – Simon Fulleringer
If you spend time thinking about it (and honestly many people haven’t) you likely have one big top priority. Some people can quickly tell you what their driving dream is, but many people need to spend some time on this – and I do encourage you to spend some time on this. Understanding what is really important to you can have a big impact on planning all parts of your life and the actions you take when presented with different options.
George Kinder has three key questions that he asks his clients when he is starting on a Life Planning engagement with them. Those questions are:
“I want you to imagine that you are financially secure, that you have enough money to take care of your needs, now and in the future. The question is, how would you live your life? What would you do with the money? Would you change anything? Let yourself go. Don’t hold back your dreams. Describe a life that is complete, that is richly yours.”
Picture the ideal life you would like to live. Money is no object – where would you be and what would you do? Have you ever taken the time to think about that? If not, spend a couple of minutes pondering the questions in that previous paragraph before considering the next.
“This time, you visit your doctor who tells you that you have five to ten years left to live. The good part is that you won’t ever feel sick. The bad news is that you will have no notice of the moment of your death. What will you do in the time you have remaining to live? Will you change your life, and how will you do it?”
Wow. Getting a bit more intense here. For me personally, that starts to get a little uncomfortable. But that discomfort is helpful in really clarifying dreams, goals, and priorities. Pause and take a few moments to think about that scenario before you move on to the next.
“This time, your doctor shocks you with the news that you have only one day left to live. Notice what feelings arise as you confront your very real mortality. Ask yourself: What dreams will be left unfulfilled? What do I wish I had finished or had been? What do I wish I had done? What did I miss?”
Sorry to break it to you, but there is a 100% mortality rate in the world. Our time is limited and we never know when our time will be up. This doesn’t need to be depressing though – use that fact as motivation to clarify what it would look like to live the life of your dreams.
Those dreams that you “left unfulfilled” and parts of life that you “missed” – great news – you didn’t! That’s why it is great to go through this exercise; because now that you’ve thought about those things you can frame your life and all planning toward making sure you DON’T miss certain things.
Let’s circle back around now on how this relates to personal financial coaching. Once you have clarified life dreams you can set some goals. Once you have goals you can define some tasks and some milestones to measure progress.
If you frame your personal finance planning toward these life goals that are super-important to you, then when a question arises that might cause a busted budget item, or a need to decide between two “good” things, you have a reference point: Do these things move me closer to my overall life goals or move me further away from them?
I know it isn’t popular to say out loud, but many parts of life are about sacrifices. Time is limited; energy is limited; money is limited. We can’t all do every single thing we want when we want to do it. There are some things that are clearly more important than others, and those lesser-importance items sometimes need to be skipped or perhaps deferred.
Dave Ramsey likes to say “Live like no one else so that later you can live like no one else.”
So please take a little time to think through what is important to you… what is REALLY important to you. Then you can start developing (or adjusting) your life and financial plans to make sure you are progressing toward the life of your dreams, and not just running on a hamster wheel or making decisions that put you off track. We’ll continue to produce resources here on the site to help and of course, you can always contact us to discuss a fee-only financial advisorrelationship if interested.