After my last post I received some feedback about planning in a general sense, so this time I have provided some thoughts which I hope you will find helpful. So, where are you going to be in a years’ time? What about 3 years’ or 5 years’? Let’s really push the boat out – what about 10 or 20 years’?
Sadly, for far too many people I meet, the answer is, ‘I don’t know.’ Helping people answer this question is often difficult as the answer is deeply personal. There is a need for a degree of self-knowledge and when working with a couple agreement between both parties. I have found the following method useful.
The first step is always to recognise the need for a goal. Obviously, life changes all the time. However research has proven that we work best when we have a goal in place. Having recognised this need, the next stage is to list on a large sheet of paper the following: the people who are important in your life and where they live; whatever it is you enjoy doing now; whatever you would like to do in the future; the places you would like to visit and where you would like to live plus any other factors you think are important for you (life milestones, such as children’s graduation or marriage). It does not matter how fantastic the ideas are at this stage or how many answers you give to each. You will notice there are no financial considerations at this stage. Take time over this but set a time limit, say 7 days as things will occur to you over time.
Next, if you are working with someone else you need to critically evaluate each of the points you have entered on the paper together. Discard the really outlandish proposals (bungee jumping on your 85th birthday etc.), and then prioritise each answer within each section (the people who are important in your life and where they live; what you enjoy doing, whatever you would like to do; the places you wish to visit and where you want to live). I have found that identify the pro’s and con’s of each choice helpful. For example: you may have listed UK as one of the potential places you will live. The pro’s may be that you will be near your family and there is state healthcare free of charge at point of delivery. The con’s may be the weather and taxes. This process will take longer than the first stage as more thought is required; however, it is important to commit time to it in order to get the right results for you.
Once each list has been evaluated you should have a clear understanding of who and what is important to you. This will also tell you where you are likely to spend most of your time and therefore where you are probably going to live. Knowing where you are going to live is one of the cornerstones of financial planning. This will determine many financial matters: the currency in which you save and invest; the tax you pay and the tax planning measures available; interest rates; inflation levels and the cost of living.
At this point a financial planner can begin to help you. You should share your ideas and goals with the planner. The more information you can provide the better, as this helps the planner gain a deeper and more comprehensive understanding of what you want to achieve. Having established the ultimate goal, your planner will help you implement your plan. They will also assist you by accompanying you along the journey. It has been shown that the more immediately realisable goals are the more likely they are to be accomplished. Therefore we break down the ultimate, distant goal into more manageable steps. This was recognised more than 2,500 years ago by philosopher Laozi in his famous quote ‘a journey of a thousand miles begins with a single step’. The planner will check the plan remains on track by recommending adjustments where necessary as your circumstances change.
I hope the above is of some assistance in helping you establishing your longer term goals. Please let me know if you have any questions or comments.