Could the way we currently do financial planning be a mistake? This blog looks at a financial planning mistake with how we do planning now, and how it might be improved.

The Financial Planning Mistake

Most of the time, financial planning centers around retirement. Typically financial planners ask their clients three questions about their retirement goal:

  1. When do you want to retire?
  2. How much income do you need in retirement?
  3. How much do you have saved now?

Then they go about crunching numbers and let them know how to make it happen. This is the same for most planning. Wanna to send your kids to college? Crunch the numbers and let’s get you headed in the right direction. Wanna buy a second home, same process.

The Problem

The challenge with goal-based planning is it’s focused on the future. As soon as I have the house, I’ll be happy. When I retire, I’ll be happy. After the kids are done with college, I can travel and I’ll be happy. None of these goals give you permission to be happy now.

A Harvard Study by Matthew A. Killingsworth and Daniel T. Gilbert showed that 47% of people spend their day thinking about something other than what they are doing. Their paper entitled A Wandering Mind is an Unhappy Mind goes on to show that the cost of being distracted is being unhappy.

Most people are distracted in one of two ways. First, they’re either worried about the future. Or they regret the past. What does this have to do with financial planning?

Planning For Now

What if you could plan for future worries AND still be present?

Good financial planning asks good questions. In addition to when do you want to retire, how about asking, what will retirement look like? If your retirement picture shows you spending time with family and friends, schedule that now. If your retirement takes you to Rome or Paris for a month, why not see if you can do that now?

A fellow planner did a life plan and found that he always wanted to spend 3 months up north in the woods in a log cabin in nature. But he never gave himself permission to look into it until he did some planning on himself. Then he spoke with his clients and looked at his situation and after some diligent planning, he is spending this winter at a cabin in the woods. Which is a little different than being a motivational speaker and living down by the river, in a van…. because you have to. Okay, so that connection was a stretch. But it’s still funny.

Don’t wait for retirement to be happy. Don’t wait for something, or some goal to happen to be happy. Even if you think your dreams are unattainable, give yourself permission to look into it. Ask your planner if they may know a better way. Give yourself permission to be happy now. And if you are retired, here’s a good way to Create Joy in Retirement.

Rich Feight, CFP
Rich Feight, CFP

Hi, I'm Rich Feight I'm a fee-only Certified Financial Planner, successful business owner, and self-made millionaire that knows how to beat the system and become wealthy. I have a lot of clients that have done it too. I'm also pretty good at finding that ever-elusive work/life balance so many of us strive for. Lucky for you I have an abundant mindset and give all my knowledge away on my blog. So if you want to know what it takes to become a millionaire, follow me.