New Year Financial Planning Tips 2016 part 4

22 Jan 2016 | Articles |

# Tip No. 4 – Let’s Make it Interesting…

January is a natural time of year to have a fresh look at things. And here’s a way you can revolutionise your finances. And it may be totally different to anything else you have read about financial planning in the past.

In our book “The Wealth Secret – Create, Build and Protect your Future, The Penguin Way” (being released soon) we have a couple of chapters where we try to explain some “conceptual” steps that individuals can take to transform their approach to managing their money.

One is around understanding some basic mathematical principles, the other is about developing a philosophy. Both are aimed at helping with the way we look at and consider our finances and wealth creation.

It is the second of these that we would like to outline in this article.

Having a philosophy means developing a particular method of thinking about your finances. It means putting money (and wealth) in its true context, understanding that money is merely a means to an end, wealth accumulation for its own sake is potentially destructive, and that the most important things in life are not going to be ‘fixed’ by money.

The philosophy we encourage in this regard is to consider and understand how financial planning works in the context of your lifestyle. It is about developing a symbiotic relationship between wealth creation (and protection) and you and your life. It is about linking what you do in your financial planning to your important wider life goals. Some people call this lifestyle financial planning.

Part of this is about defining the word ‘rich’ and working out how to have a plan which accumulates wealth for the purpose of making you rich. This does not mean accumulating a load of money simply to have a load of money. This is why we always link your financial plan to your goals. Those goals need to transcend into meaningful statements of aims for you and your family.

The dictionary offers two separate definitions of the word ‘rich’:

  1. having a great deal of money or assets; wealthy
  2. existing in plentiful quantities; abundant

We think that when you are planning your future financial map you should merge these two definitions together and make sure that your approach and goals target building wealth so you can have a wonderful and abundant life. That is why your wider life goals are so important in the decisions you take about your finances today.

If you currently find managing your money stressful or a chore that needs to be done, then you are not alone! Many people find the whole subject a switch off and often confusing. By redefining financial planning and linking this to your lifestyle, it will become interesting and challenging.

This includes using cash flow financial forecasting to align your decisions and actions to clearly targeted goals.

There are other aspects; as an example, if you are able to take a different approach and apply a new philosophy it can help to change the way you think about risk. Many investors shun a particular approach because they think don’t like the idea of losing money on an investment. No-one likes or wants to lose money and we do not recommend this!

On the other hand, growth-orientated investing involves volatility, up’s and down’s in the long term track, you almost certainly have to accept losses (on paper, in the short term, from time to time) if you are going to get decent long term gains. By adjusting your philosophy towards your investments and changing the approach (including the way you perceive this) you can invest more appropriately and be more relaxed about this.

How you think about your finances can affect your approach. Your approach dictates the eventual outcomes, therefore there is a direct link (which will play out over a long period) between how you think and the end results. By changing your thinking, your ‘philosophy’, you can alter the results.

It may well make the whole process more fun and, definitely, more interesting.

As such, our fourth tip for the New Year is:


We are here to help you initiate a fresh approach accordingly. All you need to do is get in touch!

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