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The freedom to live life on your terms

Here’s one of the hardest (or least asked…) questions when it comes to financial planning:  “How much is enough?”

It’s a simple question, but one that most people never stop to consider. We’re so caught up in the race for ‘more’ that we forget to ask ourselves why we’re running in the first place. It’s a vital question that we need to ask, so much so that Paul Armson wrote a book about it –  “Enough? How much money do you need for the rest of your life?”.

It challenges us to rethink the very essence of financial planning. It’s not about amassing the biggest fortune; it’s about funding a life that brings you joy and fulfillment.

Imagine for a moment that money wasn’t a concern. How would you spend your days? What experiences would you seek? What impact would you want to make? These are the questions that lie at the heart of Lifestyle Financial Planning.

Traditional financial planning often feels like a never-ending pursuit of more. More savings, more returns, more assets. However, Armson argues that this approach misses the point entirely. After all, what good is a hefty bank balance if it doesn’t translate into a life well-lived?

Lifestyle Financial Planning flips the script. Instead of starting with products and strategies, it begins with you – your dreams, your values, your ideal lifestyle. It asks, “What does your best life look like?” and then builds a financial strategy to support that vision.

This approach suggests that true wealth isn’t just about money in the bank. It’s about having the freedom to live life on your terms. It’s about achieving ‘financial independence’ – that magical point where work becomes a choice, not a necessity.

But how do we determine what ‘enough’ looks like? It’s a deeply personal question, and the answer will be different for everyone. For some, it might mean having the resources to travel the world. For others, it could be the ability to start a passion project or spend more time with family.

The key is to dig deep and get clear about what truly matters to you. What experiences bring you joy? What achievements would give you a sense of meaning and value? What legacy do you want to leave? Once you have a clear picture of your ideal lifestyle, you can work backwards to figure out the financial resources needed to support it.

This shift in focus from accumulation to lifestyle has profound implications. It frees us from the endless treadmill of always needing more. It allows us to make more intentional choices about how we earn, spend, and invest our money. And perhaps most importantly, it aligns our financial decisions with our personal values and life goals.

Adopting a Lifestyle Financial Planning approach doesn’t mean abandoning sound financial principles. It still involves budgeting, saving, investing, and managing risk. But these tools become means to an end, rather than ends in themselves. They’re employed in service of funding your ideal lifestyle, not just growing a bigger pile of money.

Lifestyle Financial Planning offers a more holistic and fulfilling approach to managing money. It encourages us to think deeply about what we truly want from life and to align our financial decisions with those aspirations. It replaces the anxiety of “never enough” with the confidence of knowing exactly what “enough” looks like for us.

It’s a tool to help you live the life you desire. So, what does “enough” look like? That’s perhaps where the true financial journey begins.

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The gap between our income and ego

Is money linked to our ego? It’s a question that invites us to reflect on the deeper motivations behind our financial decisions. Morgan Housel, in his thought-provoking way, suggests that “savings is the gap between your income and your ego.” 

This statement can be confronting, especially because it challenges us to consider the extent to which our financial behaviours are driven by a desire to maintain or enhance our sense of self-worth. While Housel’s observation holds some truth, it’s important to recognise that the relationship between money, ego, and personal fulfilment is far more nuanced than it first appears.

At first glance, the idea of adopting a low-ego, high-humility approach to wealth-building might seem like the most logical path. The reasoning is simple: by curbing spending driven by ego and instead focusing on saving and investing, we can accelerate our journey toward financial independence. This approach, however, can sometimes feel overly simplistic. It suggests that ego is inherently detrimental to financial success and overlooks the complex ways in which our values, purpose, and sense of fulfilment intersect with our spending choices.

For many, spending isn’t merely about satisfying an inflated sense of self-worth. It’s deeply intertwined with values, purpose, and the pursuit of personal fulfilment. Consider, for example, someone who chooses to invest in high-quality experiences or products—not to showcase their wealth, but because these choices align with their core values or bring them a deep sense of joy and meaning. In such cases, spending is not just about ego; it’s about living in alignment with what truly matters to them.

This brings us to the essential concept of balance. Financial independence isn’t just about cutting expenses to the bone or maximising wealth accumulation. It’s about ensuring that our financial decisions reflect both our personal values and long-term goals. When our spending is aligned with what we value most, money becomes more than just a means to an end; it becomes a tool that helps us lead a life filled with purpose and fulfilment. It’s not about living frugally for the sake of frugality, but about making intentional choices that serve our deeper aspirations.

This balance is critical because it acknowledges that wealth and fulfilment are not mutually exclusive. It’s possible to spend on things that matter to us—whether it’s on quality, experiences, or passions—without compromising our long-term financial goals. This requires a strategic financial plan that accounts for these intentional choices, allowing us to enjoy the fruits of our labour while still securing our financial future.

Understanding the link between money and ego is part of a larger journey toward self-awareness and intentional living. It invites us to examine where ego may be driving our financial decisions and where our spending truly reflects what we value most. By doing this inner work, we can create a financial plan that doesn’t just aim for wealth accumulation but also for a life that feels rich in purpose and fulfilment. In this way, money serves its highest purpose—supporting a well-lived life with balance, intention, and clarity.

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Nudging, not judging

Change is one of those things that we all know is necessary but often struggle with. Whether it’s a change in our spending habits, our health routines, or our approach to relationships, the process can be daunting. The desire to improve is there, but the path forward isn’t always clear or easy. This is where the concept of “nudging, not judging” can be transformative. 

It’s about guiding ourselves and others toward positive change with gentle encouragement rather than harsh criticism. When it comes to financial planning, this philosophy is particularly powerful. Let’s be honest—money is a sensitive subject!

We often feel judged, not just by others, but by ourselves, when we don’t make the “right” decisions. We look at our past financial mistakes and wonder why we didn’t do better. But this self-judgment only deepens the sense of failure and can keep us stuck in a cycle of guilt and avoidance.

Instead, what if we approached financial change with a “nudge-ment” rather than a judgment? A nudge is a small, positive reinforcement or a gentle prompt that encourages us to make better decisions. It’s not about drastically overhauling our entire financial life overnight. It’s about making incremental improvements that, over time, lead to significant progress.

For example, let’s say you want to start saving more but haven’t been able to make it happen. Instead of judging yourself for not saving enough, start by setting up a small automatic transfer from your checking account to your savings account each month. This simple nudge helps build the habit of saving without the pressure of making a huge financial sacrifice all at once. Over time, as your savings grow, you might find it easier to increase that amount—because the habit is already in place.

Nudging can also be applied to how we interact with others about money. Too often, conversations about finances can become tense or judgmental, particularly in relationships or families. By adopting a nudge approach, we can foster a more supportive environment for discussing money. Instead of criticising a partner for their spending habits, for instance, we might suggest a joint goal that requires both of you to save a little more each month. This way, you’re working together toward a positive outcome rather than focusing on past mistakes.

The power of nudging lies in its subtlety. It recognises that change is a process, not an event. Small, consistent actions, driven by encouragement rather than criticism, create a foundation for lasting change. And the best part? These small changes often lead to a ripple effect, where one positive action leads to another, creating momentum that makes larger changes feel more achievable.

So, as you think about the changes you want to make in your financial life, remember the power of the nudge. Start with one small step, encourage yourself along the way, and let go of the harsh judgments that hold you back. Because in the end, it’s the consistent, positive nudges that lead to the most meaningful and sustainable change.

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All behaviour is communication

Have you ever paused to consider what your behaviour might be saying about you… to you? It’s a fascinating thought, isn’t it? All behaviour is a form of communication. Every action we take, every choice we make, sends a message, not only to the world around us but also to ourselves.

In the realm of financial planning, this idea becomes particularly intriguing. What are our financial behaviours trying to tell us?

Think about it. When you splurge on an expensive item, what is that behaviour communicating? Perhaps it’s a statement about your desire for status, or maybe it’s about seeking comfort in material things during stressful times, or perhaps it’s your ability to reward yourself and invest in self-care.

When you diligently save a portion of your income each month, what message does that send? It could be a testament to your commitment to future security or a reflection of your values around financial responsibility.

In many ways, our financial behaviours are deeply tied to our identities, our fears, and our dreams. They reveal what we value, what we aspire to, and what we are afraid of. By paying attention to these behaviours, we can gain profound insights into ourselves and use that understanding to shape a more fulfilling financial future.

Take, for example, the act of budgeting. On the surface, it might seem like a dry, technical task—allocating numbers into categories. But look a little deeper, and you’ll see that budgeting is a powerful form of self-communication. It’s you telling yourself that your financial goals are important, that you are capable of managing your resources wisely, and that you have the discipline to follow through on your plans.

Or consider the behaviour of investing. Investing is more than just a strategy to grow your wealth. It’s a statement of faith in the future. It’s you saying, “I believe that my money can work for me, and I trust that the world will continue to provide opportunities for growth.” This behaviour communicates optimism, courage, and a proactive mindset.

Even the way we handle financial setbacks speaks volumes. When faced with an unexpected expense or a market downturn, our reactions can reveal our resilience, our ability to adapt, and our level of emotional intelligence. Do we panic and make impulsive decisions, or do we stay calm and think strategically about our next steps? Each response is a form of communication that reflects our inner strength and our capacity for growth.

The beauty of recognising that all behaviour is communication is that it empowers us to change. We can rewrite the script once we understand the messages our financial behaviours are sending. If we notice that our spending habits communicate a need for emotional comfort, we can find healthier ways to address that need. If we see that our reluctance to save is rooted in a fear of scarcity, we can work on cultivating a mindset of abundance and security.

In this journey of self-discovery and growth, it’s important to remember that we don’t have to do it alone. Just as our behaviours communicate messages to ourselves, they also communicate to those around us—our family, our friends, our financial advisors. By sharing our insights and working together, we can support each other in making positive changes and achieving our financial goals.

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So, why do we plan?

Have you ever wondered why we spend so much time planning, even when we know that life rarely goes according to plan? It’s a curious thought, especially when it comes to financial planning. Carl Richards beautifully encapsulates this paradox: “In fact, the only thing we know for sure about any good financial plan the moment we finish designing it is that it’s wrong. We just don’t know exactly how… yet.”

This might sound disheartening at first, but it’s a profound truth that holds a valuable lesson. To explore this further, Carl spoke with several pilots, posing two questions. First, “Do you prepare a flight plan for every single flight?” The answer was always a resounding “Yes.” The second question, “How often does the flight go exactly as you planned?” The response, invariably, was “Never.” 

Despite knowing that their plans would change, they still took the time to prepare meticulously. So, why do we plan?

The answer lies not in the accuracy of the plan, but in the process and the mindset it fosters. Planning, especially in the context of financial planning, is less about predicting the future with perfect accuracy and more about preparing ourselves to adapt and respond effectively to whatever comes our way.

Think of financial planning as setting a course for your life’s journey. Without a plan, you’re adrift on the winds of change, reacting to changing conditions rather than steering towards your desired destination. With a plan, you have a direction, a purpose, and a set of guidelines that help you make informed decisions, even when the unexpected happens.

Consider this: a pilot’s flight plan includes not just the intended route, but also contingency plans for various scenarios—weather changes, technical issues, or unexpected detours. Similarly, a good financial plan is flexible and resilient. It takes into account your goals, resources, and potential obstacles, and it provides a framework for making adjustments as needed.

When we create a financial plan, we acknowledge that life is unpredictable. We prepare for the known variables and set ourselves up to handle the unknowns. This proactive approach empowers us to stay focused on our long-term goals, even as we navigate the twists and turns that life inevitably throws our way.

Moreover, the act of planning itself has intrinsic value. It forces us to think critically about our priorities, define our goals, and identify the steps we need to take to achieve them. It encourages us to engage in meaningful conversations with our loved ones about our hopes and dreams, fostering deeper understanding and alignment.

So, why do we plan, knowing that our plans will inevitably change? Because the process of planning is about much more than the final document. It’s about preparing ourselves to manage uncertainty with clarity and purpose. It’s about building a strong foundation that can support us through the ups and downs of life. And most importantly, it’s about empowering ourselves to live intentionally and to pursue our dreams with confidence.

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Problems that seem simple at first

Life’s a bit of a puzzle, isn’t it? We look at our problems and think, “Oh, that’s straightforward enough.” But then we start digging, and suddenly we’re in a whole different ballgame. It’s like peeling an onion – layer after layer, each revealing something new. And you know what? There’s a reason for all this complexity – and it’s not just to bring tears to our eyes… 

Most of the time, the issues we’re facing are just the tip of the iceberg, hinting at bigger stuff going on beneath the surface. It’s all connected – our physical health, our state of mind, our spiritual well-being, and how we relate to others. It’s a big, interconnected web, and each thread tells a story.

Remember that scene in Shrek where Shrek tells Donkey that ogres are like onions because they have layers? Well, our problems are a lot like that. On the surface, they seem simple, much like Shrek and Donkey’s initial plan to have the squatters removed from Shrek’s land by Lord Farquaad. They thought it would be a quick, straightforward trip. But as their journey unfolds, it turns into a grand adventure with unexpected twists and deeper revelations.

Similarly, as we peel back each layer of our problems, we discover more about ourselves and the underlying issues at play. This complexity isn’t just a hassle; it’s a clue to understanding the bigger picture of our lives. Just like Shrek and Donkey’s journey, our path might be longer and more intricate than we initially thought, but each layer we uncover brings us closer to true understanding and resolution.

Imagine you have a financial issue that initially appears straightforward, like an unexpected expense. At first glance, it’s a matter of finding the money to cover it. But as you delve deeper, you might uncover layers of underlying concerns: stress about financial stability, feelings of inadequacy, or even relationship tensions stemming from money management.

When we acknowledge these deeper connections, the landscape of our problems shifts, they are no longer isolated incidents but part of a larger, intricate web of our lives. This realisation can be overwhelming, but it also opens up a pathway to true understanding and growth.

So, the philosophical question remains: How do we begin to unwrap the deeper layers? The answer lies in being aware that our problems are interconnected threads woven into our broader life story. By engaging in open, honest conversations with those we trust, we gain the strength and clarity to address these issues holistically.

Having people to talk to when we face problems is not a sign of weakness; it’s a testament to our relational strength. It’s an acknowledgment that we don’t have to navigate this complex maze alone. Speaking to a trusted partner, friend, or advisor provides us with new perspectives and shared wisdom, illuminating aspects of the problem we might have missed.

Carl Richards often illustrates complex financial concepts with simple sketches, reminding us that clarity often emerges from simplicity. In the same vein, reaching out for help can simplify the complexities we face, breaking them down into manageable steps.

Don’t be afraid to tap into your support network. Speak to a trusted partner, friend, or advisor. Their insights can help you untangle the complexities and guide you toward meaningful solutions. Remember, it’s through these connections and the commitment to diving deeper that we find more meaning and experience fulfillment.

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From Hocus Pocus to Financial Focus

You know that feeling when you check your bank account and suddenly you’re thinking, “Hocus pocus, I’m brokus”? Yeah, we’ve all been there. It’s like one minute you’re feeling on top of the world, and the next, poof! Your money’s vanished faster than a rabbit in a magician’s hat.

But here’s the thing: our finances aren’t actually controlled by some mysterious, magical force. Even though it might feel that way sometimes! Nope, it’s all about the choices we make every day, the little decisions that add up over time. Kind of like how a magician practices their tricks over and over until they can pull off that jaw-dropping illusion.

So, let’s talk about turning that financial “brokus” into focus. It’s not about waving a magic wand (wouldn’t that be nice?), but about understanding the ‘tricks’ of good money management.

First off, budgeting. We all know it’s about as exciting as watching paint dry. But hear this out – it’s like learning the basic moves before you can dance. Once you get the hang of it, you’ll be grooving with your finances in no time. Start small – maybe just track your spending for a week. You might be surprised at what you find out!

Then there’s saving. It’s not about squirrelling away huge chunks of money (unless you can, in which case, go for it!). It’s about consistently putting a little bit aside. Think of it like filling a piggy bank. At first, it might not feel like much, but keep at it, and before you know it, you’ve got a nice little stash. It’s not about growing money, but about building a safety net, one coin at a time. The real power is in the habit – regularly setting aside what you can, no matter how small the amount.

And investments? Now, that’s where the real financial growth can happen, though it might feel like hocus pocus at first. But here’s the thing – it doesn’t have to be complicated. Start with something simple; it’s like dipping your toe in the investment pool before diving in. 

Always remember, though, that investments come with risks, and it’s crucial to do your homework. Don’t be shy about seeking advice from a financial professional or trusted source. Think of it like joining a study group for a tough class – you’re learning alongside others, sharing insights, and hopefully all growing your knowledge (and your money) together. Just remember, unlike our savings piggy bank, investments can go up and down, so it’s important to understand what you’re getting into and be prepared for some ups and downs along the way.

The real magic happens when you combine all these elements – budgeting, saving, and investing. It’s like pulling off a complex magic trick. Each part on its own might not seem that impressive, but put them all together and… ta-da! Financial stability!

So the next time you’re feeling a bit “brokus,” don’t panic. Take a deep breath, and remember – you’ve got the power to change your financial story. It’s not about hocus pocus, it’s about focus. And with a little patience and persistence, you can turn your financial life from a disappearing act into a showpiece.

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The art of switching off

What if the key to unlocking a richer, more fulfilling life lies not in doing more, but in doing less? In our hyper-connected world, where the lines between work and personal life are increasingly blurred, this question has never been more relevant.

The older we get, the more we see and learn how burnout can impact not just our emotional well-being, but our relationships and finances too. The constant pressure to be “on” can lead to poor decision-making, strained personal connections, and even financial missteps.

But here’s the good news: creating an intentional switch-off routine can be a game-changer. Just as we carefully plan our financial strategies, we need to design our daily routines with equal thoughtfulness.

Imagine ending our workday with a ritual that clearly signals to our brains that it’s time to shift gears. It could be as simple as playing a specific song, changing our shoes, or taking a few minutes to meditate. The key is consistency – making it a habit that sticks.

This isn’t just about work-life balance; it’s about life-wealth balance. When we’re constantly in work mode, we’re more likely to make impulsive financial decisions, overlook important personal relationships, and neglect self-care. All of these can have a significant impact on our overall financial well-being.

Consider this: How often have we made unnecessary purchases because we were too stressed or tired to think clearly? How many times have we missed out on quality time with loved ones because we were mentally still at work? These seemingly small moments add up, affecting both our emotional and financial health.

By creating a clear boundary between work and personal time, we give ourselves the space to recharge, reconnect with our values, and make more mindful decisions – financial and otherwise.

Remember the wise words of Anne Lamott: “Almost everything will work again if you unplug it for a few minutes, including you.”

So, let’s circle back to our original question: What if the key to a richer life is in doing less? After exploring the benefits of intentional unplugging, we believe the answer is a resounding yes. By giving ourselves permission to switch off, we’re not just avoiding burnout – we’re investing in our overall well-being, our relationships, and ultimately, our financial future.

Our wealth isn’t just about the numbers in our bank accounts. It’s about creating lives rich in experiences, relationships, and personal fulfilment. And sometimes, the best way to grow that wealth is to simply unplug.

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The Baby-Steps Rule for Financial Growth

You know, it’s funny how we often think about our finances. We look at our bank accounts or our debts and think, “Wow, I need to make some big changes here.” And then we get overwhelmed and end up doing… well, nothing. Sound familiar?

But here’s the thing: what if we didn’t need to make those massive, life-altering changes all at once? What if we could improve our financial situation just a little bit every day? That’s where the 1% rule comes in, and, it’s a game-changer.

“If you get 1% better each day for one year, you’ll end up thirty-seven times better by the time you’re done.” — James Clear

Think about it this way. If you’re trying to save money, you don’t have to suddenly start putting away half your paycheck (unless you can, in which case, go you!). Instead, why not start by saving just 1% more than you are now? It might not seem like much, but over time, it adds up. And the best part? You probably won’t even notice that small amount leaving your account.

The same goes for budgeting. Maybe you’ve been meaning to track your expenses but the thought of logging every single purchase feels daunting. So why not start by just tracking one category of spending? Just your groceries, or your entertainment expenses. It’s a small step, but it’s a start.

And investments? Oh boy, that’s a whole world that can seem super complicated. But you don’t need to become a Wall Street wizard overnight. Maybe you start by increasing your investment contribution by 1% every month. Or you set aside a small amount each month to invest in a low-cost index fund. Baby steps.

The beauty of the 1% rule is that it makes things manageable. It’s not about overhauling your entire financial life in one go. It’s about making small, consistent improvements. And here’s the kicker – those small improvements compound over time. Just like James Clear said, if you get 1% better each day for a year, you end up 37 times (3778%) better. That’s huge!

Remember, Rome wasn’t built in a day, and neither is financial stability. But brick by brick, or in this case, percent by percent, we can build something pretty amazing. So, let’s get started, shall we? After all, your future self will thank you for every 1% improvement you make today.

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Pause before you pay (part II)

ENHANCING FINANCIAL WISDOM: FROM PRICE COMPARISON TO SPENDING AWARENESS

The simple act of pausing before making a financial commitment can transform your budget and savings strategy, echoing the thoughtful approach advocated by Benjamin Franklin: “Beware of little expenses; a small leak will sink a great ship.”

Taking a moment to think before you buy significantly encourages better spending decisions. This brief pause allows you the opportunity to conduct a quick search for better prices or alternative products. It could mean checking other retailers for a better deal or waiting for a sale period to make the purchase. 

This approach not only saves money but ensures you are making the best possible decision with your financial resources. By not rushing into a purchase, you give yourself the chance to explore all available options and potentially find a more cost-effective solution.

Regular pauses also heighten your consciousness about where your money is going. This increased awareness can reveal patterns in your spending, such as frequent indulgences in luxury items or unnecessary gadgets. Recognising these patterns allows you to adjust your spending habits to better fit your financial goals, ensuring that your money is spent in ways that truly matter to you. 

By understanding where your money frequently goes, you can identify areas where you might be overspending and make the necessary adjustments to align your expenditures with your financial objectives.

Moreover, taking a moment to reflect before spending promotes a more mindful relationship with money. 

Understanding the flow of your finances and recognising the impact of each transaction encourages a more measured and deliberate approach to consumption. As Maya Angelou eloquently put it, “I’ve learned that making a ‘living’ is not the same thing as ‘making a life.'” This insight underscores the importance of thoughtful spending, where each decision is made with consideration and intent. When you pause to consider a purchase, you are not only thinking about the immediate satisfaction but also how it fits into your broader life goals and values.

Incorporating these practices into your daily life not only improves your immediate financial situation but also sets a foundation for long-term financial health and wisdom. By pausing before each purchase, you ensure that your financial decisions are thoughtful, deliberate, and aligned with your ultimate life goals.

This mindful approach to spending helps build a more secure and fulfilling financial future. Each pause is a step towards financial prudence, reinforcing a disciplined approach that can lead to greater financial stability and peace of mind.

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