When I first meet with prospective clients the majority of the initial meeting is spent understanding their lifetime priorities. The money takes a back seat in the discussion.
This may seem surprising from someone who advises people on their money but without knowing what someone’s priorities are it is impossible to make sure the money is structured appropriately. This is because money is the means to the end, not the end itself.
As US financial planner and consultant, Mitch Anthony says:
“A sail successfully used helps a sailor gets where he needs to be. Money successfully used helps the person get to where they need to be.”
Financial planners like to talk about goals and objectives but, to me, this is cold management jargon; I don’t believe people, in the real world, outside of the office think in terms of goals and objectives. However, we all are likely to have lifetime priorities. What is important is whether we have explicitly stated them to ourselves or not.
Your lifetime priorities will be uniquely yours. For some it may be stopping work at a particular age, for others, it may be experiential. It may be being able to help others or to know that, whatever happens, they won’t be a financial or physical burden on anyone (usually their children).
Whatever your priorities are it doesn’t matter, the point is they are yours and are important to you.
By not giving thought to what your lifetime priorities are there is no way of knowing whether you will be able to achieve them or not. It’s akin to setting off on a journey without knowing where you are headed. You’ll never get anywhere if you don’t know where you are headed. Or, as Lewis Carroll’s Cheshire Cat put to Alice in Wonderland:
“You’re sure to get somewhere as long as you walk long enough.”
But who wants to keep walking without a destination in mind?
If your priority is to stop work by a particular age the subtext is being able to live the desired lifestyle, usually without money worries. Without acknowledging this as a priority there is no way you can make sure that you will have enough money by the chosen age. You will get to the point and have to hope there is enough money in the pot so that you are financially independent. If there isn’t it comes down to the choice of continuing to work or accepting a retirement lifestyle that is less than ideal. Or worse, you could work longer than necessary because you assumed you didn’t have enough.
If you never want to be a burden on anyone else, again, you will need to know how much personal wealth you need to make sure you will always have enough. By not considering the answer you will more than likely fail to build up enough financial resources to survive life’s curve balls.
If there are experiences you wish to enjoy; travel for example, you will need to know what the cost and frequencies will be so that you can factor in how much additional money you will need.
If you have never considered your lifetime priorities before it can be a challenging exercise. We tend not to spend any time thinking about the long-term; day to day ‘priorities’ and distractions tend to dominate our thinking so the long-term gets put on hold until it becomes today.
Skilled financial planners help their clients uncover their clients’ lifetime priorities by asking some simple but highly effective questions. Some of the popular ones taken from life planning gurus from around the world include:
“What is important about money to you?” Which then is drilled down into until a core priority is uncovered. (Bill Bachrach).
“If we were having this discussion three years from today, and you were looking back over those three years, what has to have happened in your life, both personally and professionally, for you to feel happy with your progress?” (Dan Sullivan)
or from the father of life planning, George Kinder, there are three back to back questions that help clients focus on what really matters most to them:
“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.”
“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?”
“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?”
Once you know what your lifetime priorities are and how much money you need to achieve them you can work out if you are on course or not. And, if not, take the necessary actions early enough to fill any gaps you have in your finances. Or, as suggested above, you may be lucky enough to find out you have enough and so stop working.
Connecting your money to your lifetime priorities – The Neligan Financial Difference.