The Importance of Life & Personal Financial Planning
If you are working in a business as an owner or employee and you have a specific skillset, the chances are you have invested the appropriate time in learning and developing the knowledge required to ensure you are capable of carrying out your role within your organization. If you are an owner of a business, you probably understand the importance of business based Financial Planning which we will cover in another edition.
The money you generate from your career or business is the oil that allows you to live the life you want and so it is vitally important that you manage this money to a good level as it will determine the quality of life you will enjoy into the future. How are you doing in this regard?
- How much time do you allocate to the management of your earnings?
- Are you qualified to manage and optimize your finances?
- Have you a plan or strategy for your money?
- Let’s take it up even higher, have you a plan and strategy for your life?
A financial plan without a life plan is baseless, therefore financial planning should begin with… your life plan.
Life Planning
This involves you defining your purpose, values, goals and objectives. The most important question for you to answer is:
“What do you want?”
It is the answer to this question that will determine the direction of your life and your money.
So how do you create a life plan if you haven’t done so already? Firstly, you want to make sure that your plan is exactly that, yours. Some people look at other people’s lives, the holidays they enjoy, the clothes they wear, the money they make and subconsciously this can influence their life planning.
To begin with a Life Plan:
- Have a clear purpose and vision for your life
- Ensure your Life Plan is consistent with your values
- Write it down! ‘A goal without a plan is just a wish’
To help you through this process download our Strategic Life Plan Questionnaire.
Once you have a strategy for your life with goals set to timelines then this is the ideal time to design a financial plan to help you achieve those goals.
Financial Planning
Is defined as:
‘A process of developing strategies to help people manage their financial affairs to meet life goals’
Most individuals we meet are usually skilled when it comes to their role responsibility and core competency. When we analyze their overall personal economy, we find that generally, it is being sub-optimized and is under-performing. This is normally down to one and/or all the following:
- They lack the time required to manage their money efficiently, economically and effectively
- They do not have the interest
- They do not have a strategic plan for their life or their money
- They do not have enough knowledge to make fully informed decisions.
This will generally lead to them seeking out advice in isolation and where the advice may be sound in an isolated sphere, when we look at the impact on the greater picture we find there is no alignment, no cohesion, no joined up thinking and this results in losses, leaks, waste and inefficiencies often to the tune of thousands over time.
Look out for our blogs where we go through Financial Planning in more detail. Start working on your Life Plan and while you’re contemplating what it is you want to do for the rest of your life maybe take a listen to the attached song to stimulate your thinking:
