Ian Thomas, Pilot Fiancial Planning
'How Much is Enough?'
How should you strike the right balance between spending money and enjoying life today and investing for a secure future? There are no right and wrong answers, but financial planners place a lot of emphasis on these individual choices and then link people’s finances to the life they actually want to live. It’s the key difference between real financial planning and what most people understand as financial or investment advice (which typically revolves around the sale of a financial product).
Everyone has different questions they want to answer, for example:
• When will I be in a position to work because I want to, not because I have to?
• How much do I need to earn, save, or sell my business for in order to maintain my current lifestyle in retirement?
• Could I pass on money to my family, or create a legacy and still be sure I’ll never run out?
The scenarios vary, but ultimately boil down to the same fundamental question: how much is enough?!
The most challenging (but also most rewarding) aspect of my job has nothing to do with detailed technical analysis of pensions, investments and so on, it’s helping people step outside their day-to-day existence and focus on what’s really important to them, rather than what other people might think.
Once these objectives can be articulated, it’s possible to draw up a financial plan which shows how this vision might be achieved. Of course, it’s not always possible to have absolutely everything you wish for, but one of the benefits of the financial planning process is that it will paint a crystal clear picture of where you stand today and the trade-offs and options you have.
Often, relatively modest changes in expenditure or investment strategy can go a long way towards achieving a longer-term ambition. On other occasions it’s even possible to put together a plan of action which can completely change the direction of your life, based on a desire to re-focus on your true priorities.
George Kinder, the father of ‘lifestyle’ financial planning, asks his clients three questions to try and elicit what’s really important to them.
Try answering them yourself, one by one:
1. Imagine that you have all the money you need, now & in the future, what will you do with it?
2. If you went to the doctor and found out you had only five to ten years to live, how would you change your life?
3. This time, imagine that you go to the doctor and find out you have only 24 hours left to live, what regrets would you have?
This exercise is certainly a useful reminder to us all that life is for living…now!
On a similar note, I read an article recently, written by a palliative nurse who has spent over twenty years caring for people in the last days of their lives. She describes the phenomenal clarity of vision that people gain at the end of their lives, and how we might learn from their wisdom. In particular, she summarises the most common regrets of her patients. The top five were:
1. I wish I’d had the courage to live a life true to myself, not the life others expected of me.
2. I wish I hadn’t worked so hard.
3. I wish I’d had the courage to express my feelings.
4. I wish I had stayed in touch with my friends.
5. I wish that I had let myself be happier.
Think about it. What do you still want to accomplish in life and how could having a proper financial plan help you get there?
Contact Ian Thomas at Pilot Financial Planning:
08453 712 808, ian@pilotfinancialplanning.co.uk
www.pilotfinancialplanning.co.uk
Pilot Financial Planning is authorised and regulated by the FCA. This article is intended to provide helpful information of a general nature and does not constitute financial advice.
First published July 2012 By The Dart