September 29, 2021

The importance of life dreams

by David Pegler

in Financial Planning Insights Lifestyle

According to a number of research studies, individuals generally spend more hours planning their summer holiday (even in 2020 and 2021!) or thinking about decorating their house than they do putting a suitable strategy together for their retirement or long-term financial future.

Managing finances can be a complex affair but it is so much easier when you have a vision of your ideal future life. Advisers that understand this and the broader context — finances, business, family, goals and aspirations — are in a much better position to advise you on how to create a robust plan to achieve these.

Your life dreams should always be at the centre of any meaningful financial plan. You ultimately need a roadmap to the future you want to have. One with clear directions but also the flexibility to cope with any (likely) changes along the way.

Despite all the moving parts, try to keep it simple and don’t get overwhelmed with all the possible options. In a single page you can prioritize what you really want in life and figure out to get there. That’s because a great financial plan has very little to do with what the stock markets are doing or what new shiny ‘tax-efficient’ product is available this month. It has everything to do with what’s most important to you.

John and Pam are currently in their mid-50s and still working up to 60 hours plus a week in the family business. With work taking over their lives, they are keen to retire as early as possible, but with little thought to their exit strategy they expect they will have to work until 65 to build up enough savings and investments for their future – a pretty exhausting thought. They dream of owning a floating home and spending more time near the water, their ‘happy place’.

Carrying out financial lifestyle planning, we found that John and Pam already have enough money to retire immediately – and more importantly the life dream of owning a floating home is now very much a reality.Without the pressure of feeling like they have to work for the sake of their retirement income, they are now much more relaxed about their future, under the assumption that when the 60-hour weeks get too much, they can in fact retire, escape from working life and live a fulfilling retirement. Meanwhile, they are enjoying every moment of planning their floating home project.