How I Craft a Financial Plan For Your Best Possible Life

When creating a financial plan for ourselves, we all know that it’s important to build our plan around the financial goals we have for ourselves and our loved ones, and then tailor our budgets and investments to follow our plan. We might come up with the plan on our own, or perhaps we’ll consult with a financial advisor to create it.

But to get the most out of financial planning and to achieve our ultimate goals, knowing and understanding the underlying reasons and motivations behind our goals—our “why’s”—is just as important as our "how’s" and “what’s”.

Why I Ask “Why” When Creating a Financial Plan

Whenever I start working with a client on a financial plan, I start with their stated desired outcome and work backwards. My clients generally know “what” they want, but I'll encourage them to also think about the “why” before we discuss the “how.” Often times, our particular perspectives might lead us on a singular path that seems obvious to us. But working with a financial advisor can help us discover that there’s more than one way to get to our destination. Better yet, some of these other ways could align better with our values. Some questions I like to ask are: 

• ‍Why is this goal important?
• What might we need to give up to achieve this goal?
• What is it about this outcome that I value so much?
• Are there other ways we can get to this outcome? What are the advantages and disadvantages of those methods?
• Does this goal actually express what I really want?

When we fully explore these and other similar questions, we can craft financial plans that create the best possible lifefor you and your family, as opposed to simply targeting a specific account balance or timeframe.

Why It’s Important To Know “Why” In a Financial Plan

I worked with a couple last year who had just welcomed their second child into the family. They came to me wanting to create an investment plan that would enable their children to attend private schools. We ran through what that goal would potentially cost—a significant sum for two children from kindergarten to 12^th grade .

We then explored their motivation behind choosing private schooling. As is the case with most parents, they wanted their children to be well-prepared for college and their future lives as adults. This led to a discussion in which my client couple listed the things they wanted for their children—the characteristics and skills that would help them succeed in life. As they read the list out loud to themselves, they realized that the quality of a private school curriculum wasn't the most important thing to them. Instead, what was more important was exposing their kids to a wider range of backgrounds and experiences, as well as building the social skills necessary to successfully interact in such environments.

With this in mind, they realized that it would actually make more sense for their children to go to a good public school. With this change in plans, the parents now had more financial resources available to nurture their family in other ways. For instance, they are now planning to take their kids on more trips to experience the world, as well as send them on summer study abroad programs to further aid in their growth.

[Please note that we’re using this example to illustrate the general thought process behind setting a financial goal and not advocating for or against private schools in general. Client individual situations will vary.]

What You Want Might Actually Be Disguised As Something Else

Sometimes, when we look more closely at the “why,” we find that the “what” of a goal might not actually turn out to be what the client thinks it is.

Take the example of a couple who came to me a few months ago and asked me to help them figure out if they could accomplish their stated goal of retiring within five years. While drilling down to get more guidance as to why they wanted to retire so soon, we discovered that it was not an issue of the couple not wanting to work anymore—in fact, they still greatly enjoyed their jobs—but that they wanted to spend more quality time with their kids.

We instead explored to see if there were other ways in which they could accomplish this goal. The result was that the couple decided they would continue to work, and to fulfill the goal of more quality time with the kids, we created a plan that enabled them to purchase a home with a larger backyard and swimming pool. With these amenities, they could have more fun with the kids at home. As part of this new plan, once the kids were grown and moved out of the house, the couple would then downsize back to a smaller home and refocus on their retirement goals.

Choose An Advisor Who Asks Why

There’s a lot more to financial planning than goals, timeframe, and investment allocations. To build the best financial plan possible, you should work with a financial advisor who can help you clarify your motivations and discover paths you might not be aware of to achieve your goals. Ideally, the advisor can then continually monitor your financial picture and fine-tune your plans as your life advances and new opportunities arise. With both these steps, you'll be able to use your financial resources to live the lifestyle you want and make the maximum impact on the people, values, and causes you care about.