We know – as you do – that achieving your life, well spent is incredibly important to you. We also know that putting the work towards that achievement can be zero fun. Even personal finance super nerds1 would much rather find exciting ways to blow money today than save and invest it for tomorrow. That’s why what may be perfectly good financial plans end up on a shelf somewhere in a dark closet, collecting dust, rather than driving you towards your pretty fantastic future.
So how do we flip the script and get excited about it?
If you read our January article about what we want for you in 2021, you know that we’ve already got a plan in place.
Your friendly neighbourhood Spring planners have spent many years trying to find ways to make financial planning less painful and possibly even fun, despite… everything about it. The number one thing we have found that absolutely works is connecting your actions with your values.
The thing about values is that we often don’t have clarity about what they are for us. While there are only so many values available for human beings to choose from, the ones that mean the most, and how we interact with them, are unique to each of us.
Our deeply held beliefs were initially learned from others, often (but not always) in childhood, and reinforced by our own experiences. But values don’t just sit there, looking pretty. No, values inform your attitudes and your opinions – and drive your behaviour.
Your values are the powerful force that drives you to take action one way or another. In financial planning, we connect with these to help you get weirdly energized about things like tax planning, risk management, and creating your retirement funds.
Defining This Month’s Value
We ask a lot of questions at Spring, and one of our main ones is:
What do you hope to get out of your financial planning experience?
We get a lot of answers to this question, but in one way or another, this answer sneaks it’s way in there:
Peace of mind.
But what does that mean – exactly? Given the dictionary definition of this phrase, we are pretty confident that “peace of mind” can be easily translated into this month’s key value: Safety and Security.
It could manifest as the very basics of physical safety and security:
It could show up as mental and emotional safety and security:
- Knowing that you’re in a place where it’s difficult for physical harm to come to you, and/or that you have the resources to leave a situation if it does.
- Ensuring that you have the resources to take care of your body if you become sick or disabled.
It could be demonstrated as having “enough” resources to:
- Living in a community or a home where you have the supports you need.
- Knowing that you have resources and support in place if you are unable to make decisions for yourself.
If you started reading this, thinking, “Safety and security? That’s not me,” we hope that in reading through this list, you’re starting to see the glimmer of your own reflection. Nearly everyone we speak with, no matter what their socioeconomic status, is extremely engaged with this value.
- Pay for food, clothing, and shelter.
- Remain financially independent, and not need to rely on the goodwill of others to be okay on a day to day basis.
- Take care of your spouse, children, elder parents, and other key members of your personal community.
Safety & Security in Cash Flow
The first place this value tends to show up is in the flow of money in and out of your pockets or bank accounts, each and every month.
For some people, it’s about getting to the place where you know you have the money to pay for all the things that make your life feel sufficient, without going into debt. It’s about looking at your bank balance without guilt or shame, and feeling actually pretty darn bouncy about it. Getting there is hard, not because the math is difficult. It’s hard because we usually have to work through some pretty tough stuff – breaking learned behaviours – to get to that positive place.
For other people, who are already feeling positive and engaged, there could be some creeping concern about how to manage differently when things change. When will things change? Why, when you are no longer working your hardest to bring in dollars, of course. If you’ve been managing your regular finances with skill in a particular way, for maybe 40 years or so, it can be confusing and concerning when you have income from multiple sources and you’re the one who is supposed to tell other people how much to send you.
Your safety and security value can feel pretty darn satiated if you’ve got an automated spending and savings plan before retirement, a thoughtful (ongoing) income plan in retirement, and professionals in financial planning, accounting, and investing to help you along the way.
Safety & Security in Portfolio Management
Deeply connected with the cash flow part of your safety and security value is the portfolio management part.
You want to know if you’re building your portfolio in such a way that you not only won’t lose the money you put into it, but that it’ll grow as well. Watching the numbers in your account drop can create a corresponding feeling in the pit of your stomach.
You know, intellectually – because you’ve heard it from so many people – that loss is normal and when the markets are down, that’s when you should be buying. For some reason, however, you might not be feeling like you can really make any kind of move or, if you do, it’ll be to get out now, before you lose any more.
If you have ever felt like this when your investments took a turn for the worse, that doesn’t mean you’re some kind of newbie. It means you’re a human. You worked hard for those dollars. They’re not just numbers on a statement or a screen.
They are the collective representation of your dreams, the future you’re working hard to create – and your safety and security value is ringing all of the alarm bells.
Feeling safe and secure in your portfolio means feeling confident that its structure and design takes you, and what you want, into account. It means having enough information and understanding to feel confident with fluctuations that are this big but maybe not ones that are THAT BIG.
Knowing what kinds of fluctuations your dreams can deal with – figuring out that target range of returns that make sense for you – tells you and/or your investment professional exactly how much risk you need to take in the portfolio that is built around your future.
Then if you have a little extra money and want to get a bit risky, you can do that in a different account – one that, if it disappears, doesn’t impact your ability to achieve your goals in the slightest.
Safety & Security in Risk Management
This is the obvious one when it comes to safety and security: creating a plan for managing all of those “what if” scenarios.
What if there’s a global pandemic and my job/business/other sources of income are at risk? As we know, this is possible. That’s where your Emergency Fund comes in.
What if I become sick or disabled? That emergency fund will come in handy, as will disability and critical illness insurance.
What if I am not able to make decisions for myself due to an accident or illness? Your power of attorney, advanced directive, representative agreement (and endless other words for “living Will”) are going to be useful – as is an advanced care plan.
What if I need home nursing or facility care? This is more and more likely for all of us as we continue to live longer lives. Your financial plan should always consider elder care costs and test for your ability to cover these.
Safety & Security in Your Estate
You might be of the opinion that if your estate is a concern, you’re no longer in the position to worry about safety and security – you’ve already passed on.
You don’t live in a vacuum though, and there are people who will be impacted by the loss of you. Whether that’s just trying to untangle the red tape to get your estate settled (it’s long, tough, and unwieldy), keeping your family members from tearing each other apart (you would be surprised who experiences grief as anger – it’s everyone), or taking care of those who rely on you in so many ways (not just financial), a strong estate plan is going to help you get things done.
That’s Just One Value…
But it’s a big one. That’s why we started with it. It’s a great deal to think about and it’s why many people want to talk to us. As you can see, there are multiple moving parts to this and it can feel overwhelming to even contemplate it.
However, if safety and security is an important value to you, we know you don’t want to set it aside. You want to make sure that everything is in order, so you can feel the anxiety lift from your shoulders – and trust us, it really does.
Once you have satisfied your safety and security value, you have the freedom to start looking at all the other things that will get you excited about your version of a truly successful and happy life. We’ll be talking about all of those in the next few months!
1We might know one or two people like this. Maybe.