Henry Ford famously once said (supposedly) that if he would have asked people what they wanted, they would have said faster horses. Often, people can describe their problems in great detail, but the solution becomes difficult to find and articulate. In this case, people wanted to get places faster and they assumed a faster horse would be the solution…not many people were thinking automobiles!
The Traditional Approach to Financial Planning
As financial planners, we are not building cars or riding horses, but we often meet people during times of transitions. People are wondering where their income will come from during retirement, how much they should be saving for college or retirement, should they set up a Roth IRA or Traditional IRA, or what they should do with their old 401(k).
The traditional approach to financial planning has been to focus the discussion on assets, investments, liabilities, and net worth. After all, if you are talking about saving for your goals, isn’t the best solution to discuss the best investment for your portfolio…sort of like “building” a faster horse?
Life-Centered Financial Planning
Actually, we think there is a better way to do financial planning, one that is centered around your life. As a life-centered financial planner, one of our main goals is to increase your sense of financial well-being and life satisfaction. Therefore, in addition to traditional discussion of assets and net worth, we are asking clients “What will bring meaning and purpose to your financial life?” Study after study has shown that it is not about the amount of money people make, but rather what they do with the money they make that leads to a high level of financial satisfaction…or dissatisfaction.
Satisfaction describes a feeling of fulfillment or contentment. Its meaning is relative and often dependent on one’s definition of success as applied to specific areas of life. In our financial lives, “satisfaction” is as much (if not more) an emotional issue as a practical one. That is because a sense of satisfaction is highly subjective, and greatly influenced by the individual’s attitudes and beliefs.
Are You Financially Satisfied?
In our society, we tend to equate financial satisfaction with having a lot of money. In actuality, the degree to which one feels satisfied with his or her money life is based on a unique and personal interpretation of his or her financial needs and circumstances. In other words, two individuals can experience identical financial situations, and yet the degree of financial satisfaction they feel can be at polar opposites. For example, one person can feel gratified and “wealthy” with an annual income of $100,000 while another person will feel disillusioned and deprived at this same level of income.
Values are the essential meanings relating to what is desirable or has worth. Like “satisfaction,” values are subjective in meaning and unique to each individual. In a nutshell, values reflect what matters most to us.
In Everything You Know About Money is Wrong, author and financial advisor Karen Ramsey writes:
“In personal financial management, the place to begin is to adopt a realistic perspective. Money will only improve the quality of your life when it is used with clarity. Only when you learn to spend money in concert with your underlying values- things that you most deeply care about-will it become a tool for creating a more fulfilling life.”
Two Tools for Financial Satisfaction
So, how can you go about improving your level of financial satisfaction? As the old saying goes “what gets measured gets improved.” We have two tools available to measure your current level of financial satisfaction and identify upcoming transitions that could affect your future financial satisfaction:
Financial Satisfaction Survey – A good financial plan strives for more than a good return on your investment portfolio. This worksheet will guide you in assessing your level of satisfaction with various aspects of your financial life. From here we will discuss the steps we can take to increase your sense of financial well-being.
Life Transition Survey – Every transition you make along life’s journey has financial implications. Therefore, we want to make sure that the financial advice we give is correlated to your current circumstances and addresses your concerns and aspirations for the future. One of our primary objectives is to help you make successful life transitions.
Once these two tools are completed, we can begin to get a picture of your current financial satisfaction, your values, what is important to you, and what transitions we should start planning for in the future. These two tools are just the beginning of helping you create a vision of your ideal future.
So, if you are interested in building a car and not just a faster horse, we would be happy to send you a copy of the Financial Satisfaction Survey and Life Transition Survey to complete and discuss your results. Contact us today for your free copy of these surveys.