Life planning

— I can’t remember now who the author of this article is, but the message is something which I’d like to share with everyone —Traditional financial planning is all about math and money. You look at how much you earn, figure out how much you will need in the future to maintain your desired lifestyle and try to come up with an investment plan that will help you reach the magic number that will allow you to retire. The process is generally about as exciting as balancing a checkbook and as emotionally draining as paying taxes. Unfortunately, many people choose not to deal with it all, preferring to put off worrying about the future until it arrives. Others go about the process with a sort of resignation born of the fact that, aside from death and taxes, your bills are just another part of life – they need to be dealt with because you don’t have much choice. However, there’s a quiet minority of investors that are taking a different approach. It goes by a variety of names, but “life planning” is one of the more frequently heard terms.

Life planning is different than traditional financial planning because the focus is more about who you are and who you want to be than it is about money. Unlike people engaged in the traditional planning process, people engaged in the life planning process don’t look ahead in an effort to figure out how to maintain their current lifestyles in retirement. Instead, they look at how to change their current lifestyle to achieve the lifestyle of their dreams. Read on to discover how you can use this approach to financial planning.

The Ideal Lifestyle
Many people credit the baby boomers for this trend – former flower children who grew up and were absorbed by corporate America, but who never lost their ideals. Just as the boomers redefined their “golden years” as a time to be more active than their predecessors were, some want to go a step further and redefine themselves.

For these people, the concept of money is intertwined with the concepts of spirituality, creativity, family, service and other emotional aspects of personal satisfaction. Happiness is measured in more than just dollars and cents. It’s not, “he who dies with most toys wins,” it’s, “he who gets the most out of life wins.”

For many, it’s more of a lifestyle change than anything resembling the retirement-planning process most of us are familiar with from 401(k) seminars at work or meetings with a financial advisor. The doctor who wants to be a painter, the law clerk who wants to be a poet and the city-dwelling office manager who longs for a cabin in the mountains are all increasingly turning to financial-service professionals for help in making those dreams come true. Of course, the money plays a big role too. (

Money and Sacrifice
There’s just no escaping the money (or the lack thereof). The mailman who wants to become Donald Trump is probably out of luck. However, the attorney who wants to trade in her suit to pick up a hammer and open a repair shop might be able to do it in cash. The others have to make choices, so they work with a financial advisor in order to determine how to develop the financial plan that will allow them to realize their personal goals.

Rather than trying to earn more money or build a bigger nest egg, a significant number of people need to make do with less in order to achieve their goals. Giving up the big house, trading in the BMW and skipping the month-long trips to Europe can help decrease expenses and enable people to trade in their day jobs for lower paying, but personally-fulfilling, professions and past-times.

If living in a small apartment frees up enough cash to increase time spent on the golf course, some people are willing to make the trade. In order to exchange the stress of corporate management for the quiet bliss of a career grooming pets, some people are willing to take a significant cut in pay. When you don’t like what you’re doing and know how you’d rather spend your time, life planning can help you make the transition.

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Trimming Expenses

Now that Christmas is just around the corner (and hopefully the shopping list has been accomplished), it’s time to make lists for the New Year. Let’s count the ways in which we can save on a few more pesos.
  1. Pay cash whenever possible. Psychologically, it’s harder to spend cash than use plastic.
  2. Research before travelling. There is a wealth of knowledge AND bargains to be found online.
  3. Plan your purchases. Don’t buy on an impulse. Patience is a virtue. If you see something you like in a store, chances are that it will be included in one of the many midnight madness sales which come at least once a quarter. Why pay full price when you can get it for 20% off? =)
  4. Open a separate savings account (preferably one of the higher interest money market accounts) for big-ticket items such as appliances, travel, or house.
  5. Use a budget, especially for gifts.
  6. Track your spending on paper. If you write it all down, you’ll probably spend less.
  7. Ask if there are discounts (before ordering in restaurants or checking out at the counter). You’d be suprised at the number of freebies you can get in restaurants if only you ask.
  8. Quit the cigarettes and the booze.
  9. Save all your change and use it to buy gifts next year.
  10. Have pot-luck dinners. Rotate the hosting.
  11. Have semi-annual garage sales. If you haven’t used it in over a year, chances are you won’t use it in the years to come.
  12. Only use ATMS where you won’t be charged service fees.
  13. With the rising cost of oil, look at fuel-efficient cars when considering your next purchase.
  14. Pay off your credit cards monthly and avoid paying interest.
  15. Take advantage of your company benefits — take that annual medical/dental exam. Health is wealth.
  16. Buy term instead of whole life or universal life insurance.
  17. Take advantage of VOIP for your long distance calls.
  18. Cut back on eating out.
  19. Buy energy-efficience appliances. They’re cheaper in the long run.
  20. Keep up maintenance on cars. It may prevent costly future problems.
  21. Pay your bills online. Check out the online bills payment facility of bancnet.
  22. Buy an e-pass or EC Tag. It will save you time and remember, time is money.
  23. Brown bag it or scout out the inexpensive place to buy lunch.
  24. Do you REALLY need that capuccino? =)

Are you an ‘extreme worker’?

Do you know someone to exhibits these signs?
— Long work weeks — put in over 70 hours a week on the job
— Are available to serve clients and deal with their emergencies at any time of the day or night.
— Little time off. Take 10 or fewer vacations per year, far fewer than they are entitled to.

Sylvia Ann Hewlett, recently wrote an article in the Harvard Business Review about the rise of the “extreme worker”. Increased competition for high-level positions and declining job security has encouraged excessive work. The image of the overachiever has been glamorized and the financial rewards have been great. As has been the fallout in their personal lives.

We live in a world which celebrates the extreme.. from extreme sports to extreme reality shows. There is little room for moderation.

I don’t know if that is the American way of life which has insiduously seeped into our own culture. I look at envy at the Europeans who have such joie de vivre.. and take their month long vacations seriously. Laura Stack said it best: Overwork is not a competition worth winning.