Financial Planning vs. Financial Life Planning: What’s the Difference? (Part 2)
In part 1, I introduced you to services financial planners provide and how you can benefit from them (if you haven’t read part 1, I recommend reading that first here). By now, hopefully you know this is something you don’t have to do by yourself. Financial planners will work with you to help you figure out how to plan your financial future. That’s great, but a word of caution: not all financial plans are created equal.
Picture this: you decide to work with a financial advisor and you’re excited to put a little intentionality into your financial life. So you reach out to Cookie Cutter Financial Planning and the conversation goes like this:
Advisor: Thanks for coming in. We’ll build you a great financial plan. To get started, I need all your financial information and the following goals:
When do you want to retire and how much will you need each year?
How old are your kids and do you want them to have a public or private education?
We’ll do the rest.
You: But…
Advisor: Don’t worry about it. We’ll take great care of you.
The financial advisor will give you a few tasks and send you on your way. And you find the whole experience drab and uninspired so you end up not doing anything at all and you’re back to square one.
This, my friends, is financial planning 1.0. You see, some plans are all about money and arbitrary goals. They forget about a little something called “life” and the personal dreams, fears, habits and concerns that come with it. And you end up with a plan that’s not true to you and your values, but based on somebody else's definition of your best life.
Enter financial life planning (financial planning 2.0). It’s exactly as it looks: putting your life (and all of its authenticity) in the middle of the financial plan. Yes, it incorporates all of the elements of financial planning 1.0, but it’s a lot more than that. Because if the plan is going to be personal and motivating, then those things are necessary but not sufficient on their own.
You hear this all the time: financial advisors are supposed to act in your best interest. So how can they do that if they don’t really know what your interests are? What’s missing here? Financial life planning is different because it adds a personalized discovery process that enables the planner to truly get to know you. Through insightful conversations, exercises and tools, a financial life planner will start to learn:
What’s your why?
What is going well in your financial life and what needs a little boost?
What lights you up and how can you do more of that?
What keeps you up at 3 a.m. and are there any financial implications?
What is your history with money and how is that affecting your financial decisions today?
Don’t you think that the person you’re entrusting with your hard-earned money should know some of these things?
The best part about financial life planning is that it's an empowering exercise for the client as well. It’s a self-discovery process that goes beyond money and entices you to grow as a person. When was the last time you looked into why you continue to make poor financial decisions even though you know they’re not good for you. Or asked yourself if your spending is aligned with your values? When was the last time you even stopped to think about your values? Probably not recently. (Counterculture rant coming up!) And not because you’re a bad person, but because we live in a society where the last thing companies want is for you to be introspective and question what actually makes you happy. Why? Because you might just find out that happiness already lives inside you, and you don’t need any of their products or services to be happy.
So if you are among those who are not excited about the results of “using your life to make money,” you’ll find the opposite mindset of “using your money to make a life” to be both liberating and compelling. This is what financial life planning is all about.
If you think financial life planning (financial planning 2.0) is right for you, click below to set up a free consultation call with me. I’m excited to learn more about you and what type of life you want to live.
