The Life Planning Process

Life Planning sets the sail.

Everyone wants to enjoy financial freedom and live a successful life, but few are willing to take the initiative to make it happen. More often than not, people cruise through life on ‘autopilot’ hoping that one day they’ll purchase a winning lottery ticket, or that their imaginary ship will come in. Sadly, for most this never happens. But for the few who DO seek professional financial guidance, create a life plan, stick to it, and monitor progress along the way, the rewards can be great.

After having been in the financial profession for for many years, I can say with certainty that Financial and Life Planning DOES work. I’ve seen it happen over and over with past and present clients and if you’ve got what it takes, YOU TOO can make your life better, save enough for retirement, plan college for the kids (or yourself), take dream vacations, buy a house, improve your financial standing and change your lifestyle. It all begins with a dream, a good plan, and you.

Life Planning vs. Financial Planning

Life Planning is different from Financial Planning, but both are important and related. According to Investorwords.com, a Financial Planner is an investment professional that helps individuals set and achieve long-term financial goals, through:

  • Investments
  • Tax planning
  • Asset allocation
  • Risk management
  • Retirement planning
  • Estate planning
  • The role of a Financial Planner is to find ways to increase the client’s net worth and help the client accomplish all of his/her financial objectives.

    Life Planning, on the other hand, is focused on who you are and who you want to be. People engaged in the Life Planning process don’t look ahead to figure how to maintain their current lifestyles in retirement, rather they look for ways to change their current lifestyle in order to achieve the lifestyle of their dreams.

    It’s not all about the money

    For life Planners, the concept of money is combined with the concepts of spirituality, family, community service, creativity and other emotional aspects of personal growth and satisfaction. It’s about getting the most out of life and doing what you truly love rather than what your pocketbook or financial plan dictates.

    Money, however, is an important element in the Life Planning process. Once you decide what it is you want to accomplish you must decide what you need to do (or do without) to achieve it. If your goal is to build a bigger nest-egg for retirement or send your child to college, you can always get a second job or start a side business, or you can give up the big house, trade in the expensive car or skip the month long trips to Europe. It all comes down to what is important to you.

    How to get started

    A good Life Planning Coach with certification as a Financial Planner (CFP®) can help you resolve these issues and assist you in developing a life plan that works based on your needs and desires. It’s not easy work and it takes determination and often sacrifice, but the results are worth it and can take you to the place where you want to be.

    For more financial planning resources, see my “Important Links” page.

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    Best Practices When Approaching Financial Planning

    Approach Financial Planning with goals in mind.

    • Set measurable goals
    • Understand the effect your financial decisions have on other financial issues
    • Re-evaluate your financial plan periodically
    • Start now – don’t assume Financial Planning is for when you get older
    • Start with what you’ve got – don’t assume Financial Planning is only for the wealthy
    • Take charge – you are in control of the Financial Planning engagement
    • Look at the big picture – Financial Planning is more than just retirement planning or tax planning
    • Don’t confuse Financial Planning with investing
    • Don’t expect unrealistic returns on investments
    • Don’t wait until a money crisis to begin Financial Planning

    How To Make Financial Planning Work For You

    You are the focus of the Financial Planning process. As such, the results you get from working with a financial planner are as much your responsibility as they are those of the planner. To achieve the best results from your Financial Planning engagement, you will need to be prepared to avoid some of the common mistakes by considering the following advice:

     

    • Set measurable financial goals

     

    Set specific targets of what you want to achieve and when you want to achieve results. For example, instead of saying you want to be “comfortable” when you retire or that you want your children to attend “good” schools, you need to quantify what “comfortable” and “good” mean so that you’ll know when you’ve reached your goals.

    Understand the effect of each financial decision

    Each financial decision you make can affect several other areas of your life. For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child’s education may affect when and how you meet your retirement goals. Remember that all of your financial decisions are interrelated.

    Re-evaluate your financial situation periodically

    Financial Planning is a dynamic process. Your financial goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial plan as time goes by to reflect these changes so that you stay on track with your long-term goals.

    Start planning as soon as you can

    Don’t delay your Financial Planning. People who save or invest small amounts of money early, and often, tend to do better than those who wait until later in life. Similarly, by developing good Financial Planning habits such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies.

    Be realistic in your expectations

    Financial Planning is a common sense approach to managing your finances to reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control such as inflation or changes in the stock market or interest rates will affect your Financial Planning results.

    Realize that you are in charge

    If you’re working with a financial planner, be sure you understand the Financial Planning Process and what the planner should be doing. Provide the planner with all of the relevant information on your financial situation. Ask questions about the recommendations offered to you and play an active role in decision-making.

    (Article from cfp.net’s Learn About Financial Planning section)

    For more financial planning resources, see my “Important Links” page.

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    Six Financial Planning Basics

    Establishing and defining the client-planner relationship.The Financial Planning Process consists of the following six steps:

    1. Establishing and defining the client-planner relationship. The financial planner should clearly explain or document the services to be provided to you and define both his and your responsibilities. The planner should explain fully how he will be paid and by whom. You and the planner should agree on how long the professional relationship should last and on how decisions will be made.
    2. Gathering client data, including goals. The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should gather all the necessary documents before giving you the advice you need.
    3. Analyzing and evaluating your financial status. The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.
    4. Developing and presenting financial planning recommendations and/or alternatives. The financial planner should offer financial planning recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate.
    5. Implementing the financial planning recommendations. You and the planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your “coach,” coordinating the whole process with you and other professionals such as attorneys or stockbrokers.
    6. Monitoring the financial planning recommendations. You and the planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes.

    (Article from cfp.net’s Learn About Financial Planning section)

    For more financial planning resources, see my “Important Links” page.

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    The Financial Planning Process

    The Financial Planning Process

    What you should know about Financial Planning

    You may have come across the term “Financial Planning” and wondered what it means. You may have decided to start your own financial plan but you’re not sure how. Or you may feel it’s time you went to a Financial Planner for some professional advice.

    What Is Financial Planning?

    Financial Planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child’s education or planning for retirement.The financial planning process consists of six steps that help you take a “big picture” look at where you are financially. Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals.

    The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans.

    The benefits of Financial Planning

    Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you pay off your mortgage faster or it might delay your retirement significantly. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

    Can You Do YOUR OWN Financial Planning?

    Some personal finance software packages, magazines or self-help books can help you do your own Financial Planning. However, you may decide to seek help from a professional financial planner if:

    • You need expertise you don’t possess in certain areas of your finances. For example, a planner can help you evaluate the level of risk in your investment portfolio or adjust your retirement plan due to changing family circumstances.
    • You want to get a professional opinion about the financial plan you developed for yourself.
    • You don’t feel you have the time to spare to do your own financial planning.
    • You have an immediate need or unexpected life event such as a birth, inheritance or major illness.
    • You feel that a professional adviser could help you improve on how you are currently managing your finances.
    • You know that you need to improve your current financial situation but don’t know where to start.

    (Article from cfp.net’s Learn About Financial Planning section)

    For more financial planning resources, see my “Important Links” page.

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    The Life Planning Process

    Life Planning sets the sail.Everyone wants to enjoy financial freedom and live a successful life, but few are willing to take the initiative to make it happen. More often than not, people cruise through life on ‘autopilot’ hoping that one day they’ll purchase a winning lottery ticket, or that their imaginary ship will come in. Sadly, for most this never happens. But for the few who DO seek professional financial guidance, create a life plan, stick to it, and monitor progress along the way, the rewards can be great.

    After having been in the financial profession for for many years, I can say with certainty that Financial and Life Planning DOES work. I’ve seen it happen over and over with past and present clients and if you’ve got what it takes, YOU TOO can make your life better, save enough for retirement, plan college for the kids (or yourself), take dream vacations, buy a house, improve your financial standing and change your lifestyle. It all begins with a dream, a good plan, and you.

    Life Planning vs. Financial Planning

    Life Planning is different from Financial Planning, but both are important and related. According to Investorwords.com, a Financial Planner is an investment professional that helps individuals set and achieve long-term financial goals, through:

  • Investments
  • Tax planning
  • Asset allocation
  • Risk management
  • Retirement planning
  • Estate planning
  • The role of a Financial Planner is to find ways to increase the client’s net worth and help the client accomplish all of his/her financial objectives.

    Life Planning, on the other hand, is focused on who you are and who you want to be. People engaged in the Life Planning process don’t look ahead to figure how to maintain their current lifestyles in retirement, rather they look for ways to change their current lifestyle in order to achieve the lifestyle of their dreams.

    It’s not all about the money

    For life Planners, the concept of money is combined with the concepts of spirituality, family, community service, creativity and other emotional aspects of personal growth and satisfaction. It’s about getting the most out of life and doing what you truly love rather than what your pocketbook or financial plan dictates.

    Money, however, is an important element in the Life Planning process. Once you decide what it is you want to accomplish you must decide what you need to do (or do without) to achieve it. If your goal is to build a bigger nest-egg for retirement or send your child to college, you can always get a second job or start a side business, or you can give up the big house, trade in the expensive car or skip the month long trips to Europe. It all comes down to what is important to you.

    How to get started

    A good Life Planning Coach with certification as a Financial Planner (CFP®) can help you resolve these issues and assist you in developing a life plan that works based on your needs and desires. It’s not easy work and it takes determination and often sacrifice, but the results are worth it and can take you to the place where you want to be.

    For more financial planning resources, see my “Important Links” page.

    Print Friendly

    © 2015 Chuck Jones & Associates, Inc., 7110 SW Fir Loop, Suite 240, Portland OR 97223-8025 (503) 291-1313. CERTIFIED FINANCIAL PLANNER™ are
    certification marks owned by the CERTIFIED FINANCIAL PLANNER™ Board of Standards, Inc. These marks are awarded to individuals who successfully complete
    the CFP® Board's initial and ongoing certification requirements.