Financial planning goals are endless but actual priorities point you towards just two primary outcomes: your money will outlive you; or you will outlive your money. Essentially, these “two doorways” represent the path towards financial independence on one hand or financial misery on the other.
The Power of Choice
Your financial choices in the past, in the present, and in the future will determine which of these two doorways you will walk through. Financial choices fall into three main categories: status quo; sales/broker advice; or un-conflicted advice. Status quo (or inertia) is a very powerful force. This is characterized by doing nothing different, hoping for the best or doing it yourself. Relying on sales/broker “advice” starts with a misalignment between your goals and the sales goals of the broker/salesperson. This conflict can be very costly to your future. Finally, the choice of un-conflicted advice. This is centered around your goals and your best interest.
We have developed a tool for tracking financial planning progress called The Personal Wealth Benchmark (™). This is focused on inputs, the controllable aspects of our life. Ultimately, your inputs will largely determine your outcome. Trying to engineer or control outcomes is mostly fantasy.
The Personal Wealth Benchmark (™) formula contains five inputs. These inputs are: saving; spending; investment allocations; time; and behavior. For someone in the wealth accumulation phase of life saving and behavior may be most important. For someone already retired, spending (which is the inverse of saving), investment allocations and behavior will be crucial.
The objective for The Personal Wealth Benchmark (™) is to establish a benchmark from which progress towards long-term goals can be measured. Actual saving versus the benchmark and actual investment returns versus long-term averages (for your allocation level) are quantifiable. The time input is either the years until financial independence (for those in the wealth accumulation stage) or years until age 95 for those already retired. Behavior is focused on staying on plan and not allowing short-term volatility to impact your commitment to your long-term goals.
So, which doorway do you want to walk through? Ready for a real conversation?