Building Community With Your Financial Plan
Each year at Spring Plans, we like to write our articles around a theme. Last year, it was case studies of amazing clients we’ve had the pleasure of working with. The year before, it was how to use design thinking to make great decisions about your finances – because that’s what financial planning is about: great decisions.
When it comes to the life that you are building, the key component of making great decisions is clearly understanding the values that inform your life. Your value system is unique to you, which is why no two financial plans are the same – even if the “facts” like your family composition, your net worth, your income, and your expenses are somehow magically identical to those of another person. Your plan, and the strategies you employ to achieve the life you really want, is going to be unique to you.
That’s why, all year long, we’ve been writing about some of the values you talk to us about and how you can put them to use in your finances. We’ve also been writing about financial systems and how you can use these to reflect your values. We’ve written about safety and security, cash flow planning, family, education planning, freedom, retirement planning, portfolio planning, and achievement.
This month, we want to talk to you about a value of ours that you might also share: Community.
As with all values, we start with the word, but the definition is unique to everyone. For our team at Spring, we define it as:
You can see how that definition is very, very specific to the way that we work together in this particular community. However, each of us has different definitions when it comes to the other kinds of communities that we belong to. Clearly understanding our own definition of what “community” means in each community – and knowing why it’s important – is a huge part of understanding how this value shows up in our lives. The way that community shows up in your life is unique to you.
Think about your communities. You belong to a lot of them. They might be in your neighbourhood – if you get to participate in one where people know each other’s names, borrow cups of sugar and coffee, and have group social events. They might be in your business or profession, where people come together to share ideas, innovations, and support for each other. They might involve a physical or intellectual pursuit, where people connect over skills, interests, and pure joy. They might be in areas of change that are important to you, where people work towards a common goal to improve a specific area of the world.
Even if you see yourself as not very social, you belong to communities. It’s basically how humans operate. We want and need communities in order to feel connected, valued, and whole. It’s programmed into every one of us. Your communities – wherever they are, whomever is in them, and whatever you do together – are likely deeply important to you.
So what does the value of community have to do with your finances? Well… everything.
Your Cash Flow and Your Community
Your community value is going to be operationalized in how you spend your time. It’s going to either take some money or make some money.
If it takes money, it might be as simple as the cost of a hot beverage once a week or a tray of goodies when you host game night or book club. It might be the membership fee for joining that community. It might be a regular investment in equipment, clothing, books, cards, or whatever else makes your participation possible. It might be the outlay of some dollars towards the change you want to see in the world. It might be an investment of your time, which may mean carving some hours away from money-making endeavours.
If it makes money… which it very well could… then how it makes money, and when you see any part of that money, is also part of your cash flow plan.
In all cases, it’s worth stopping to contemplate your communities in the context of your finances. How much will they contribute to your income? How much will you set aside out of your income to contribute to them? If a particular community is incredibly important to you, how much will be enough for you to feel that your value has been met?
Your Portfolio and Your Community
If your community takes money, then you may want to consider drawing from your portfolio to satisfy that requirement. If it makes money, then your portfolio may grow because of your involvement.
Also, you may want to demonstrate this value in the investments that your portfolio makes. So that your community can benefit from your specific investments, you may choose to allocate a portion of your portfolio in that direction. It may be a larger community, such as simply your country, province or city, where you want to direct your investment. You may be interested in a more targeted community, such as a business sector or leadership group. The change you want to see in the world can be demonstrated right in your portfolio.
As with cash flow, your community value will either add to or take away from your portfolio. It might be in money coming in or flowing out of your portfolio. It might be in choosing to invest – or not invest – in specific areas. What is important to you is understanding that your value is a part of how you make portfolio decisions, whether you’re working with an investment management team or going it alone.
Your Taxes and Your Community
In many ways, your taxes are already contributing to your community. Taxes, paid to various levels of government, contribute to the costs of infrastructure, health care, education, arts, culture, and so much more. While you have some decision-making power, based on how you vote, a lot of those distribution decisions are out of your control.
Some people actively avoid tax minimization strategies (truly!) because this is how they want to demonstrate their community value. Some people combine tax minimization strategies with their community contributions through philanthropic ventures and charitable donations to specific causes that are important to them. Either way, your taxes are an active participation in your community, and you have degrees of power in how those dollars are distributed.
Your Estate and Your Community
At the end of your lifetime, you’ll likely have some stuff that will need to be distributed. Taxes and probate fees will eat up some of that – contributing, in some ways, to your community. You’ll also have some important decisions to make through your Will and beneficiary designations.
You may decide to leave your antique foosball table to your league. You may decide to donate your body to scientific research or your organs to people in need of transplants. You may leave your grandparents’ love letters to your children, your twelve-sided dice to your Dungeons & Dragons group, or your carefully curated library of humorous fiction to your business partners. You might gift money to the organization that helped your highschool friend get off the streets, or a charity that ensures a First Nations community has clean water. You might fund a scholarship at your mother’s university. The options are truly endless, and often we find that estate planning can really help us understand which values are the highest priorities to each of us.
Your Value of Community
As with all of our values and all of our financial decisions, there are going to be trade-offs. If you allocate time, money, or focus in one direction, that necessarily means you’ll be focusing it away from other directions.
Determining how and when to make certain decisions becomes a lot easier when we’re clear about our own values because they tell us, in no uncertain terms, exactly what should take precedence both during our lives and after it. If community is a top-level value of yours, how will you start to demonstrate it in your life going forward?