Life planning gives people a sense of direction and purpose and is very enriching. At the same time, it can be complex because it takes several, often conflicting factors into account – our assets, our expenses, and our lifestyle.
For decades, financial advisors have been trying to help people plan out their lives, but this is made difficult because our circumstances and desires do not remain static. Difficult yes, but it is possible, and newer planning software is assisting advisors to make life planning a reality.
A Scare for William
Let us look at an example. William, the owner of a small, Canadian, privately owned corporation, spent most of the last fifteen years concentrating on his business. All of his time, effort and money went into it, much to the detriment of his family, friendships and even his health. A heart attack scare led him to realize that his priorities needed to change if he wanted to live to see any of the rewards of his hard work and persistence.
Thankfully, his scare turned out to be nothing more than indigestion, compounded by an anxiety attack – but it still stirred up a desire to live a more balanced, fulfilling life.
His company was doing very well, so he would be able to put some of his profits to good use, but his personal finances were a bit of a mess. He had not put any money aside for his personal use other than to pay his monthly bills. He started thinking about the type of life he would like to lead, and saw himself traveling (for fun, rather than just business), skiing (which he used to love doing growing up), and maybe even starting a family if he found the right person.
However, William, like most of us, found that change is not easy. A consummate workaholic, he almost could not bear to think of going in to work late, or leaving early. He had the desire to change, but change can be difficult when we are comfortable in our daily routine – even when we are not happy.
William needed help.
He decided to talk to his financial advisor, to ask for assistance in creating a comprehensive plan. His advisor had planning software, which would help him with all the different aspects of life. He needed a plan that would help him with his new financial requirements, investment needs, and desired lifestyle.
How to Create a Life Plan
Where to start? The first step in creating a Life Plan is to examine and finalize William’s goals and objectives. Similar to how a map is important when setting off for a road trip, goal setting is one of the most important steps in the Life Planning process. Without this, the Life Plan will lack direction and important aspects of William’s life could be completely overlooked. Sufficient time must be spent on this, preferably in face-to-face meetings between William and his advisor.
William’s advisor walked through the whole process with him – examining his goals, helping to determine which are most important, and building a road map to help him get to where he wanted to be. Many of his aspirations required funding, which requires a variety of plans to be integrated appropriately, and put into place synergistically.
For this reason, Life Plans have various important sub-plans. For William’s situation, these included Financial Planning, Tax Planning, Succession Planning, and Estate Planning.
Over the next several posts, we will tackle these plans one by one – and get William a life!
By Gino Scialdone, Black Spruce Financial
gino@blacksprucefinancial.com
Next blogpost: Finances – This Time It’s Personal!