Financial planning basics

I’ve been asked about my “recipe” for successful financial planning.  I don’t have one – in the sense of “ten top tips” that work for everybody.  People, you, are unique and there isn’t a one size fits all solution.  Anybody who says there is, is an idiot or a liar.

But based on a degree and a half plus 14 years as a financial advisor and degree, masters and a doctoral level qualification and 12 years as an occupational psychologist, here’s what I suggest you think about.

Start with your life values or purpose.

  • What do you really value?  That usually takes some thinking about.  It’s more than “a mansion” or “a flashy car” – it’s about what are you on the planet for?  Some people will claim that they can talk to you for five minutes and ask you a couple of “key questions”, and determine it for you – but they can’t.  It requires you to think about it and maybe enlist the help of your partner, family, friends etc.  to get a really clear picture of what would make your life a really worthwhile one in your own eyes.   

Then think about what money symbolises for you,

  • Are you chasing things because your friends or family have got them, or because you really value them?  It’s something that people often do, confuse a symbol like a big income, a yacht, power etc. with something that will actually make them happy.  Then if they do manage to get the symbol, they aren’t happy, they just crave another symbol and become yet another rich, unhappy person. 

When you’ve done these, set your goals

  • There are various ways to set goals to help you achieve your real values.  I’ve set out what I use with clients in my book, but a big point is that the goals need to lead you to your values, not away from them.  One problem I have with the idea that SMART goals are enough is that SMART doesn’t mention that you need both short-term exciting and long-term linked-to-your-values goals, and that both need to point the same way!

Then set out the plan to achieve the goals!

  • When you’re doing that, there are some things to keep in mind.

  • Understand your own thinking.  There is no point following a plan that requires you to be a Vulcan, you’re not, you’re human.  You need to understand what is easy for you, what is hard but possible, and what is impossible.

  • Work with your mind, not against it.   When you know how you think (you don’t try to pretend to be a totally different person than you are) and you accept reality (you don’t make plans that would work on another planet, but not this one), your human “weaknesses” can be strengths.  There’s more about doing that in my book, but a lot of “bad money habits” can work to your advantage if you think about things in a way that is helpful. 

  • Finally, get help if you need it.  It’s OK for John Wayne to be tough and do “what a man’s gotta do”, but that was in films and in real life it is just stupid!  There are no prizes for struggling on alone (unless you think being unhappy is a prize you want to win) so if you feel you can’t deal with your money and you won’t find a way to be happy – get help.   

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