Historically, your financial advisers job to help you reach your financial goals. You want to retire, travel, or buy that vacation home? Set your goal and we will tell you how to get there. This approach has left many people unprepared for the realities of a traditional retirement and feeling unfulfilled and unhappy. The financial services industry has set people up for failure when planning is all about a product that will get you to your goal. In my client interactions over the past 23 years, I have embraced that a healthy financial life in your fall season is so much more.
To maximize your financial and life potential, you want to set financial goals and wisely manage life transitions. There are quantitative, calculable aspects and qualitative, or affective components to both.
Goals are the things we want to happen – the vacation, the new vehicle, the vacation home, a child’s wedding, the proverbial “retirement”.
Crunch the numbers – The quantitative component of goal setting is relatively easy. Make them SMART – specific, measurable, attainable, realistic and tangible. You want to take a trip? How much will it cost? When do you want to take it? Is it within the realm of your financial capacity? How much do you need to save to make it happen? Can you take the trip and still have enough to live on for the rest of your life? You may also have longer term goals that would require addressing inflation factors, tax implications, asset allocation strategies, and economic climate considerations.
The softer side – The qualitative side of goal setting requires deeper personal reflection, but will also provide you with deeper fulfillment upon attaining them. Make your goals Significant – Discern if it is a “soul need”; or an “ego” desire. Make them Meaningful – Align them with your values, not on what the trivial discourse is, or what your neighbors are doing. Are your goals Attractive? Have you created a positive image that pulls you toward them with clarity and conviction? Make your goals Rewarding. Goals require weighing the cost and benefit. Are yours worth the risk and commitment? Finally are your financial goals Timely? Is the life season right? Should there be a set date for completion of the goal or not?
Life transitions, on the other hand are the things that happen, some expected, some not; that usually have large financial implications. Nobody sets them out as a “goal”. A divorce, a death, a job or career loss, a special needs grandchild, an unanticipated health issue are just a few life transitions we may all experience. This is the crux of what true financial life planning is all about.
Know your numbers – The quantitative component of managing life transitions involves understanding what financial resources you have and knowing how and when to use them. With many life transitions, there is more uncertainty regarding amounts needed, or when will you encounter them. It is harder to discern which financial tool to use to give you the cash flow necessary or the tax implications of using one vehicle or another. The financial decisions around transitions are much more complex and will require a healthy dose of broad based expertise. There is no “set it and forget it”. Like a garden that goes through seasonal changes and needs to be tended to and nurtured based on the season it is in, so your financial life needs to be constantly tended to as you ebb and flow out of transitional life seasons.
Know yourself – The qualitative aspect of life transitions span the horizon from attitudes to behaviors. Are you a victim of circumstance or do you want to be victorious, no matter what happens in life? What character assets do you have in place to tap into? Are you resourceful, resilient, creative, relational, loyal, compassionate, forgiving, courageous? In addition to the financial assets, you will need to tap into your character assets to deal with what life tosses your way.
The benefits to delving into your financial life beyond your goals include peace of mind, and autonomy about your future. Create margin in the lifestyle, longevity, liquidity and legacy components of your life by looking at how to use the numbers wisely and manage transitions effectively. Build your tribe to educate, empower and support you in attaining your financial goals as well as to work alongside you to tend your financial garden through life transitions.
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