The first and most important step in the Financial Planning Process is helping the client understand what is most important to them. Often referred to as goal planning, financial planners help clients identify and quantify short and long term goals. This can be challenging and is sometimes an awkward question to answer. Few of us have it as easily figured out as Mr. Ron Burgundy (What he loves most is poetry, scotch, and his little dog Baxter).
To help me draw out client goals, I go through an exercise to help my clients understand and acknowledge what is most important to them. We all have a finite amount of money that we will make in our lifetime. The challenge is splitting up that money to support what we value most.
Is it Travel?
Is it Experiences?
Is it Hobbies?
Is it House/Cars?
Is it Family?
Is it Health?
Is it Giving?
Is it Work?
Is it Peace of Mind?
Is it Freedom?
Likely, it'll be a combination of many of these things. But for each person, the weighting will be a little different. It is also a very personal question and something that needs to be contemplated and discussed with your spouse (if you have one). It forces us to step back and take a look at our lives as a whole. Once you've identified your values and goals, you can ask yourself these two questions:
- Is your spending in line with your values?
- How can you structure your finances to support these goals?
All other financial planning recommendations will be guided by these values, and aimed at achieving your goals.