October is Financial Planning Month, therefore, today we discuss:
- How much is enough?
- Setting one-year, five-year and 10-year financial and well-being goals.
- Revisiting your budget. (See our helpful budgeting template below.)
Your future, how much is enough?
Our goal today is to help you explore your financial, emotional and physical well-being goals, since they’re interrelated and essential for building a comprehensive financial plan.
When planning goals, a key question to ask yourself is: How much is enough?
Candidly, the answer isn’t always clear.
In a recent article called 2,500 Years of Thinking About “How Much is Enough?”, the author tries to help us answer the question by highlighting popular philosophers’ thinking, such as Lao Tzu, Henry David Thoreau and others, and how each addressed the idea of sufficiency, contentment and the value of money.
Overall, the “thinkers” emphasized the importance of personal values and mindset in determining “enough,” suggesting it’s not merely about a specific monetary amount, but rather a reflection of what truly matters in life and embracing the flow of money rather than accumulating it.
Said differently…
Think of money as the sails on a ship. You need them to navigate the financial waters, but the real voyage is about the destinations and experiences along the way, not just the sails themselves.
Understandably, many of the conversations we have with clients are about money. However, in celebration of Financial Planning Month, we’re encouraging you to also think beyond money to help ensure that your personal values are reflected within your plan. Said differently, what meaning and fulfillment do you seek?
Questions To Ask Yourself
It’s important to revisit your financial plan at least annually, since life’s only constant is change. Therefore, consider your financial and well-being goals over a one-year, five-year and 10-year timeline.
ONE YEAR FROM NOW
Financial Goals:
- What specific financial milestones do you want to achieve in the next year?
- Are there any short-term savings or debt reduction goals you want to prioritize?
- Do you have any upcoming major expenses, e.g., vacation or home renovation?
Lifestyle and Health:
- What health and wellness goals do you want to achieve in the next year?
- Are there any lifestyle changes or experiences you want to prioritize?
FIVE YEARS FROM NOW
Long-Term Financial Goals:
- What are your major financial objectives for the next five years, e.g., buying a second home, starting a business, etc.?
- How much savings and investment growth would you like to see during this period?
Family and Personal Life:
- Do you plan to care for grandchildren or aging parents?
- Are there personal or family milestones you’d like to achieve in the next five years?
- Who do you want to spend time with?
Retirement Planning:
- What date do you want to retire?
- How do you envision your retirement lifestyle, and how will you stay mentally and emotionally engaged during retirement?
TEN YEARS FROM NOW
Long-Term Financial Security:
- What are your financial aspirations for the next decade?
- Do you foresee any major expenses 10 years from now, e.g., a new furnace or roof?
Legacy Planning:
- What legacy or charitable contributions do you want to make in the next 10 years?
- Do you have a clear plan for how you want your assets distributed upon your passing?
Health and Well-Being:
- What steps will you take to maintain or improve your health and well-being as you look 10 years ahead?
- Do you have healthcare and insurance plans in place to support your long-term health needs?
- How do you want to feel while retired?
Travel and Experiences:
- Are there specific travel destinations or experiences you’d like to enjoy in the next decade?
- How will you allocate time and resources for these endeavors?
Resource: Earlier this year we created a Prolonging Retirement Income checklist. If you haven’t had the opportunity, definitely take a look. The checklist also includes key retirement-related questions to ask yourself. You’re welcome to share it.
Financial Planning Mindset
To strengthen your financial mindset and goal-setting abilities, we recommend the book, The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel. (We have extra copies of his book. Reach out if you’d like one. It’s a must-read!)
Housel discusses the psychological aspects of money and investing, emphasizing how emotions and biases can impact financial decision-making. This is relevant to financial planning because understanding your own financial psychology is key to making informed decisions.
He also talks about the importance of adaptability in financial planning. As you ponder your one, five and 10-year goals, being flexible in your financial approach and adjusting to changing life circumstances is crucial for long-term financial success.
“Planning is important, but the most important part of every plan is to plan on the plan not going according to plan…a plan is only useful if it can survive reality. And a future filled with unknowns is everyone’s reality. A good plan doesn’t pretend this weren’t true; it embraces it and emphasizes room for error. The more you need specific elements of a plan to be true, the more fragile your financial life becomes.” – Morgan Housel
Budgeting
Many people underestimate how long they’ll live in retirement. It’s crucial, therefore, to maintain an accurate budget to help prolong retirement income.
For instance, using the Social Security Administration’s Life Expectancy Calculator, a man born in 1958 (age 65) retiring today can expect to live roughly 18 more years, and a woman born at the same time can expect to live roughly 21 more years. Keep in mind, these numbers don’t factor in health, lifestyle or family history.
In the end, to project the longevity of your retirement savings, a well-maintained budget is essential. Budgets, much like financial plans, benefit from annual reviews and adjustments to ensure their success.
Our job is to tell you what you can afford to spend without running out of money. If there’s a discrepancy between this number and your goals, let’s talk. It’s important no stone be left unturned.
Resource: Check out our detailed budgeting spreadsheet. Even if you already have one, it’s worth a quick look to help ensure you haven’t missed any categories. (Note: Depending on your computer settings, this document opens a live spreadsheet, or in some instances it downloads automatically. Either way, it’s a link within our secure website.)
Please feel free to reach out to discuss this in more detail.
–David Bunker, Financial Advisor & Fiduciary
Before You Go
Get help optimizing your retirement income. Download our FREE “Prolonging Retirement Income” checklist.
Also, receive help retiring to the life you want, schedule a complimentary financial planning consultation.