Defining the Why Behind Your Financial Life Plan

Many people think that financial planning is investment management or insurance sales, but those are just financial planning tools. Real financial planning is the process of aligning all of your resources to support your life goals. Said differently, financial planning (when done right) is the process of painting your dream life, being clear and honest about where you currently are, and developing a plan to get to that ideal life. Although the financial planning process usually entails several steps, we will focus on the first and most important step, painting the picture of your dream life. Keep reading to learn the three steps that will help you uncover the Why behind your financial plan.

1. Remove the Noise

Before you can paint the picture of your ideal life, you must clarify your core values. What drives you? What is most important to you in life? Understanding your core values will help you tailor your financial plan to you. Your core values will also help you navigate during rough seas, and when things are unclear, they will remind you of what’s most important. However, uncovering your core values can be difficult with all the distractions and priorities of life, so digging deep to uncover what really matters can take some work. To help remove the noise, take some time to be honest with yourself, and answer the following questions.

  1. If you had all the money you needed in life, what would you do differently?
  2. If today was your last day alive, would you have done anything differently?

Note: Answer both questions independently of each other.

It’s essential to take the time and visualize these questions by putting yourself in the scenarios. You need to see the answers to these questions in your head before you can feel them in your heart and eventually have the answers fuel your hands when implementing your financial plan.

These are some heavy questions, no doubt, but they are useful in getting you to remove all the extra noise of life and getting to what matters. The answers to these questions are your core values; write them down because they will help you create and prioritize your financial planning goals.

2. Envision Your Ideal Life

Now that you know what’s most important to you in life, ask yourself, are you putting the time and effort into those things? The answer for most of us is no. However, the good news is that you have the clarity now to be intentional about how you spend your resources (time, money, skills, and energy).

Before you begin to create your goals, take some time to envision your ideal life, one where you are living in alignment with your core values. How would you structure your time? Where would you live? Who is in your life? How does your fulfilled life look? These things are all important because they will shape the goals you create.

Note: Don’t hold back when envisioning your ideal life; the time for figuring out the HOW will come later. Right now, just focus on the dream life that is aligned with your core values.

3. Create Your Goals

After you have painted the picture of your ideal life, you can begin to create goals for living it. Start by asking yourself what you can do now to move closer to living the life you envisioned? The intention here is to develop goals that will help you live your best life for the rest of your life. Meaning, you don’t want to go bankrupt five years from now due to overspending, nor do you want to save every penny and put your current life in the deep freezer. Think sustainability and balance when developing your goals.

Many of your goals may be long term; however, you can usually do a few things in the short term that will move you closer to living your ideal life. Also, keep in mind that not all of your goals will be directly related to your finances. For example, one of my core values is being a good father. So, I decided that one of my goals would be to have more meaningful conversations with my children. With that goal in mind, I began to set aside one hour every night to my tuck my children into bed and ask them about their favorite part of the day. Although this goal doesn’t exactly involve money, it does involve my most important resource, my time. Hence, if I am ever tempted to work late, I know that tucking my children into bed and asking them about their day is an important goal. Thus, I will be more intentional with my time and my work schedule. Remember, the focus of your financial life plan is not your money; it’s your life.

Note: Learn more about structuring your goals here.

Final Thoughts

We all know money is important in our lives, but our financial plan’s focus shouldn’t be on merely getting rich but rather on living a rich life. Taking the time upfront to paint the picture of your ideal life and aligning your goals to that life will ensure that you’re mentally and emotionally invested in your financial life plan. If your head and your heart are aligned behind your plan, your hands will do the work. Although some sacrifices will undoubtedly need to be made, most people find that their dream life is worth the sacrifice and commitment necessary to make it happen. Lastly, remember that aligning your life with your core values is a process and will take time. If you need help developing a life centered financial plan, or want an expert opinion, consult with a qualified financial planner.

Author: Jose Armenta, MsBA, CFP®, ChFC®, EA

Jose Armenta is a CERTIFIED FINANCIAL PLANNER professional who specializes in helping federal employees get the most out of their federal benefits. Jose's experience serving federal employees provides him with valuable insight into the unique financial planning needs of federal employees.