Life Planning: The bedrock of your financial plan


You can unlock many doors in life by building and sticking to a strong financial plan, but at the root of all good financial planning, there should be a focus on how you actually want to live your life.

Aspiring for financial independence should always be tied to more meaningful non-financial goals. No one strives to pay down debt, improve their credit score, build up sizable savings accounts, or have a diversified portfolio of investments just so they can brag about it. The point of doing all of that is to enable you to have as many opportunities to live the type of life that you want.

Sometimes we can become so caught up in reaching our financial goals just for the sake of it, that we lose focus on why we are putting in the hard work on the road to financial independence in the first place. Life planning is the bedrock of a solid financial plan.

What is Life Planning?

If you had all the money in the world and could do anything you wanted to with it, how would you use it? Maybe you were told you had one week to live, what would you do? If you were on your deathbed, what do you think you might regret? These may come across as silly questions by themselves, but these are the types of questions that should be answered if you want to take a life planning approach to your financial plan.

Life Planning takes a top-down approach, meaning you need to consider the highest levels of meaningful and fulfilling life goals first, and then plan to make financial decisions that lead you towards achieving these goals over time.

These life goals also don’t all need to be long-term ones. They don’t even need to be lofty. It can be as simple as wanting to ensure that you can take Friday afternoons off every week to spend more time with your family. If this is a goal that would bring more happiness to your life, then you need to make a plan for reaching that goal and it should be accounted for in your overall financial planning.

Why is Life Planning Important?

You probably are aware that focusing on your goals through the grime of daily struggles and emotional triggers is easier said than done. The biggest enemy you have in your quest for financial freedom is probably your own brain. Our human brains try so hard to make us act irrationally when making financial decisions. Many of the thoughts and reactions that influence our decision-making were programmed for survival, and survival means doing what we need to today to make it to tomorrow. It is a relatively newer luxury in the grand scheme of things for us to have the ability to plan for the future, so the concept of making decisions that involve delayed gratification goes against much of our basic instincts. This tends to make us overreact with our decision making when we see something in the news that scares us.

We also tend to internalize unpleasant tasks that are associated with financial planning differently if we can clearly tie them to the goals we are trying to reach. This is even more true if these goals aren’t just financial goals, but things that will make a positive and noticeable impact on your life. Does sticking to a budget give you anxiety? That anxiety is eased when you recognize that sticking to your budget is directly tied with your lifelong dream of traveling to Europe.

How can you incorporate life planning into your financial decisions?

In a sense, Life Planning boils down to good goal planning. Identifying the right goals is the first and most important step to any good Life Plan or Financial Plan. There are all kinds of great goal planning exercises out there and any of them could do the job if you take a thoughtful approach to narrow down your objectives.

Once you have identified your most important (and not necessarily financial) life goals, you can think about how these enormous pursuits can be broken down into smaller, more digestible goals that you can view as “rocks” to build your path. Setting “rocks” that serve as benchmarks that ensure progress towards your life goals is key. This is done through careful planning and the creation of systems. These systems should create intentionally designed habits that we can build to go into “auto-pilot”, ensuring that we are doing the things we need to do to reach the benchmarks.

Taking Action

If we can focus on finding the things that truly give us joy, incorporate them into our financial planning considerations, and then develop habits that ensure progress towards reaching our goals, we can live more purposefully and the daily struggles of achieving financial freedom will be taken on with a more intimate, meaningful inspirational state of mind.

Life Planning is the bedrock of a solid financial plan. Check out how you can establish meaningful goals with an actionable execution plan at our Advisory Services page.