This is your life plan

Financial planning can be boring

Planning how to take advantage of tax relief, build a retirement pot or avoid inheritance tax, isn’t the most exciting aspect of our lives. We know that it’s important and has to be done at some point, but we keep putting it off for a rainy day because it’s dull and boring and we’d much rather do something more enjoyable. Sound familiar?

Research has shown that having a life plan that focuses on your dreams and goals will increase your motivation levels, helping you to make progress towards what matters and improve happiness. (1)

So, is it possible to create a life plan and combine it with financial planning?

The good news is that the two go hand in hand. But there’s more to it than asking yourself: “How can I reduce the tax I’m paying?” or “When can I afford to retire?”

Creating a life plan requires a broader perspective. It goes beyond basic facts and figures; life planning is deeply personal. We need to ask more meaningful questions, be open and honest, and occasionally confront some hard truths.

Living the life you want – goals, hopes, and dreams

Taking the time to work out what you really want to achieve with your money is key.

You may already have some goals in mind, such as buying a new car. By planning ahead, we can ensure funds are available in the most tax-efficient way, hopefully avoiding selling funds at an inopportune time.

But what about your aspirations? Instead of solely considering monetary needs, focus on envisioning how your future life might look and feel, based on what we know now.

For example, we may ask a client approaching retirement: 

Q: Over the first three years of retirement, what would you need to happen for you to consider it as a success?

“I want to complete my master’s degree in…”

“I want to visit my brother in Australia.”

Q: How does your perfect week look?

“Pick the grandkids up from school, couple of days out, work on my university course and improve my golf swing.”

Q: Is there anything you would be disappointed not to achieve in your lifetime?

“I have always wanted to learn to fly an aeroplane.”

Fulfilling a lifelong dream has shown to be beneficial for our wellbeing and can help us focus on achieving our dreams as opposed to thinking: “How much do I have?”

Looking after those you love

Having more than just a family tree and a list of your assets will help us build a clear picture of what you value and what motivates you. We may also uncover areas you haven’t considered before but now need building into your plan. Questions we may ask:

Q: How would you like to support your loved ones now and in the future?

Q: What are your children’s biggest financial concerns?

Q: Do you have any concerns about helping them?

There may be some difficult decisions you wish to place on the back burner or conversely, ones you wish to tackle head-on. See our related website article on ‘Courageous conversation’.

Leaving a powerful legacy

You may wish to leave a long-lasting legacy that benefits the people and/ or causes closest to your heart.

Maybe you want to ensure that your grandchildren’s and great-grandchildren’s education needs are catered for or perhaps you want to leave your own philanthropic legacy, in which case, we will arrange a meeting with our philanthropic expert, Andrew Evans.

By acting today, we can help to minimise the amount of tax you’re currently paying and will pay in the future, so your money can make an even bigger impact.

Q: Who would you like to benefit from your money when you’re no longer here?

Q: What impact do you hope to make?

Mind over money

In crafting a financial plan, we must acknowledge that no investment comes without risk. Every financial plan will involve an assessment of the level of risk you need to take to achieve your goals. However, not all plans include a discussion about how you might feel in times of market volatility. We know this can have a huge impact on your emotions and ultimately the decisions you make.

Pre-empting problems before they arise is an integral part of getting the life plan right.

Q: What worries you about your finances and why?

Q: Have you ever made and later regretted a decision regarding your investments?

We can agree how to communicate news about changes in markets effectively, without causing undue worry, and what level of information you need to make decisions around finances, i.e., some people prefer lots of detail while others just want the headline facts.

We can better understand how much input you want or need to stay on track. Do you prefer a light touch approach, or more frequent touchpoints at certain times, such as when markets are volatile?

Adapt and compromise

A robust plan must be adaptable to accommodate growth and changes in circumstances, whether that’s due to personal or external factors.

Delaying these decisions and conversations may lead to making poor choices and create unnecessary worry. Planning ahead and recognising that you need to expect the unexpected, while accounting for these possibilities, will allow you to have confidence in your financial future, regardless of what challenges arise. For example, if things don’t go to plan:

Q: Are you willing to continue working if needed or are you prepared to downsize?

Q: What can you compromise on or where can you reduce spending?

We will also agree what level of emergency fund you need to handle any unexpected expenses that life throws at you.

The hard truths and nothing but the hard truths

For a plan to work we will explain the limitations, ensuring we don’t over promise or under deliver. We’ll also be clear about the consequences of not sticking to the plan!

For example, if you continue to spend at the same rate, your funds will be depleted in xx number of years or conversely, if you don’t spend the planned amount per year, your IHT liability will increase to xx amount over xx number of years.

Q: What’s stopping you from achieving your goals?

Q: What’s getting in the way of doing what you said you’d do?

In summary, your life plan will be a guide for creating the life you want to live. It will empower and inspire you to take action. One thing’s for certain: it won’t be dull or boring!

This article is intended as an informative piece and should not be construed as advice.

To start making your life plan today, call us on 0161 383 3335 or reach out to your usual Equilibrium contact.

(1) Action for Happiness – Set your goals and make them happen