I have looked at many, many examples of financial plans in search of a tool that could help me create a useful wealth plan. Most plans I have come across start with goal setting and end with a model of how to fund those goals. I can appreciate how that’s a reasonable, sound approach. It just wasn’t for me. Don’t get me wrong, I’m very Type A and love working towards goals. When it comes to planning out my financial future, however, I just didn’t think that was the right place to start. For one thing, I actually found it kind of depressing. I remember looking through a seemingly promising retirement planning tool with several sample goals. One of those goals was ‘new sedan every 5 years.’ I pictured myself at 63 looking forward to a new beige sedan, still 2 years away, and it just made me sad.
Instead I chose to start with what was meaningful in my life and worked backwards to the money part. What made more sense to me was to think about personal milestones and to take stock of my values first. Then I thought about how my finances could play a supporting role.
Inspired by tools I had created at IDEO to uncover insights about people’s relationships with their finances, I designed a worksheet that I could use on myself (and my spouse) to serve as a foundation for our family wealth plan. This tool helped us map out what mattered most and showed how that connected to our finances.
The exercise revealed that, for us, it’s not about how much stuff we will acquire throughout our lives or when we’ll acquire it. And it’s certainly not about buying a new beige sedan every 5 years. We do, however, value feeling financially secure. We wanted to know that we’d have enough to continue our lifestyle in perpetuity. We wanted to feel prepared for the unexpected should something financially significant and out of our control happen–like a medical emergency or a major car repair.
We also highly valued things like time with family and friends and learning–both through formal education and through experiences. After knowing that the essentials were taken care of, we wanted to understand what options were available to us to spend money on things we valued. What could we fund? Should we be coordinating low cost things like hikes and potlucks to spend time with family and friends? Or could we be shopping for a vacation home where many future memories would be made?
Starting with the heart – personal milestones and values – helped lay the foundation for a wealth plan that was much more relevant and meaningful. From there, I could see how to build something that was just as thorough as other planning tools out there, yet was a much more valuable resource that I could use to guide important future decisions.
If you’re interested in trying out the tools I created, please drop me a note and I’ll send them your way. (kate at wealthredesigned.com)