Prologue: Life Planning & Money Mindset
First Thing First
I've put Life Planning first for a reason. And that reason is simple. Because Life Planning is the single most important element of your financial plan. Financial planning is great, but every plan is planning for something. And when it comes to financial planning, what you're planning for is your future life.
What the heck is Life Planning? At it's core, it's about goal setting. Your plan needs a goal. And that goal is to deliver you a life that you feel passionate about living.
This lofty ambition begs two related questions. First, what type of life do you want? And second, at what point in the future do you want it? If you don't take a moment to carefully answer these questions, any financial plan you develop will be of questionable value. Life Planning is the process of answering these two questions.
I suspect the unexamined (e.g. default) goal of most financial planning is a financially secure retirement. And that's great - that's not a bad goal. Perhaps those are the only goals your financial plan seeks to achieve. But honestly? I think you can do better.
What do you REALLY want your life to look like?
This is the question that Life Planning really seeks to answer. Do you want a financially secure retirement where work is optional? Great! What does that look like? What about that is important to you? And if you could have that... is there anything else you'd want for your life? And when would you want it? Maybe earlier than the day you retire?
Life Planning isn't just about what you want retirement to look like. It's about what you want your life to look like at all points in the future. Including, like... I dunno, tomorrow.
And what about that near future?! Do you want to work more? Work less? Change the way you work? If you work less, what is it you want to do with your time?
I think most goal setting exercises which are used in the financial planning industry are far too narrow and unimaginative. We are talking about designing your life, so let's take some time and really open horizons up for you!
"Don't I need to figure out my finances BEFORE I decide what I want my life to look like?"
In a word... No. Please don't.
Do you want to let your financial resources dictate how large (or small) your dreams can be? Or would you rather dream big, unconstrained by any (perceived) financial restrictions, and then figure out how to make those big dreams happen?
I hope you answered you want to dream big. I love people who want to dream big. And most of us do! Who wouldn't?!
But too often we unintentionally allow our financial circumstances to shrink our dreams. Why? Because it's hard to do otherwise! You have any number of financial concerns to deal with. Add to that a hectic, full life. Who has the time, energy (not to mention money) to dream big? Much less make those dreams a reality?!
And yah, all fair points. But do yourself a huge favor. Make time and space for yourself to simply dream big, without slowing down to think about if any of it's possible. Suspend your disbelief - just for a little bit.
It doesn't matter if you think it's possible or not. Not in the beginning anyway. Check out the resources in this section to help you figure out how to do this kind of dreaming. Your future self will thank you.
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Life Planning Resources
Click on the orange section headings to expand
Learn More about Life Planning
If you're curious about what's contained in the Life Planning Process, check out my Life Planning overview page. Although that page describes how I facilitate the Life Planning process, you can conduct the Life Planning process for yourself as well.
How might you Life Plan yourself? Well, let me point you in the direction of some resources! (That is what this page is all about, after all.)
The style of Life Planning I practice (and the method I'm talking about here) was developed by George Kinder who founded the Kinder Institute of Life Planning. You can learn more about George and his vision for Life Planning at their website.
Do It Yourself Life Planning
The best way to embark on your own Life Planning journey is to read George's book Life Planning for You. This book is a great overview of what life planning is all about, as well as a complete how-to guide. You may also wish to use the companion Life Planning for You website to help facilitate some of the exercises.
Hear Other Financial Planners Talk About Life Planning
There is a whole community of Registered Life Planners out there. Listen to some of their thoughts on how to apply Life Planning to live your life of greatest value, meaning and purpose.
Workable Wealth Podcast episode: The Benefits of Life Planning with Scott Frank
Money Owners Podcast: Back to Basics + Kinder's 3 Questions
These resources aren't precisely the formal Life Planning process I've referred to elsewhere in this section. But they are helpful resources which hold similar philosophies.
What do I mean by the Life Planning philosophy? That money is a tool for helping you live your greatest life. Money isn't the end all be all, it's just a tool. And so you need to first define what you want your life to look like before knowing how to use the tool of money.
Tiffany's Fun with Fees Calculator
I love Tiffany McLain's Fun with Fees Calculator. This tool helps you think through all the different parts of your life that your income needs to support. The calculator takes you through that exploratory exercise, helps you think through how much you want to work, and then arrives at what hourly rate you'll need to charge to get there. Does that sound a little scary? It might! But knowing what to shoot for is the first step!
Tim Ferris' Fear Setting Exercise
Tim Ferris isn't everyone's cup of tea, and at times he isn't mine either. But his Fear Setting Exercise is rather brilliant. It encourages you to get specific about what you fear, and then think through what would actually happen if that fear came to pass. Fear Setting then asks you what you could do to mitigate (or even avoid) those outcomes. And you'll often be surprised how much there is you can do to reduce the scariness of those fears.
If you go through this exercise, you might find that the fears holding you back aren't nearly as scary as you first thought.