Planning your money around your life

Laura du Preez | 27 September 2023

Laura du Preez has been writing about personal finance topics for more than 20 years, including eight years as personal finance editor for two leading media houses.

Money plays a big role in our lives and can enable us to live the life we want.

Discussions about money should not therefore just be around maximising returns or minimising tax, but rather about the life you want and how to use your money to make that a reality.

Increasingly financial advisers are seeing this as part of their role.

Money is so entrenched in how we see ourselves in the world, how we value ourselves, and how we value our lives, that advisers have to have more brave conversations to help people know what they want to do in life and how their money can support that, Sharon Moller, financial planning coach at Old Mutual Wealth, told the recent Humans Under Management conference in Cape Town.

This annual conference focuses on advisers’ role in managing you – their human client – rather than managing your money or assets.

Advisers who are prepared to help you identify and plan for your life goals and not just show you numbers and charts that will achieve the best results, often refer to themselves as lifestyle financial planners. Read more: How do I find a financial adviser who is right for me?

Moller said if advisers do not have lifestyle conversations with you, they will not know if the financial goals you set and plan for together, are in fact the ones that would reduce your anxieties and stress.


Lifting a life sentence

Warren Ingram, an independent financial planner with Galileo Capital and former winner of the Financial Planner of the Year, told the conference about a lifestyle-led plan he made with an accountant who had a job at a multinational company and was five years away from retirement.

Traditional advice for the best financial outcome would be for the man to keep working and saving as much as possible to ensure a good income retirement, Ingram said.

But the man was bitterly unhappy in his job and chosen career. His pain caused him to be rude and unfriendly and he was at risk of mental or health issues. Serving out his last five years at work would have been like a prison sentence, Ingram said.

Ingram said after talking to him, he helped him devise a plan to downscale his standard of living so that he could take early retirement. He moved to a smaller house in a rural area and managed to cut his living costs by a third.

Despite settling for a lower income, the change made the man happier and grateful for the space and the freedom to do something that he really needed to do.

Ingram said it was initially scary for him as an adviser trained professionally to draw up a financial plan for the best financial outcome to instead make a plan that was led by what a person wanted in their life. But for the accountant, the plan was life-changing.

Patterns that keep you stuck

Financial advisers can help you identify the patterns in your behaviour that result in you being “stuck”, Moller said. If they ask you the right questions and get you to reflect on your behaviour, you will see what you need to change.

This approach should help you to “live your full life and be who you are really supposed to be”, she says.

Financial plans focussed on maximising financial outcomes can leave you cold if you have a great yearning to do something or your life feels like a meaningless grind of working and spending.

If you don’t have a good relationship with money, your other relationships will be tainted by it. You will show up differently for the people you care about, Moller said.


Working out how to flourish

Dr Meghaan Lurtz, senior research adviser for the US-based site for financial planners, says initially when you meet a financial adviser they are focused on fixing your financial problems.

They may help you plug holes in your investment goals or retirement planning, put appropriate protection against the risk of early death or disability in place, and help you earn and invest tax efficiently.

Or you may seek their help after a change in your circumstances – a birth, a death, a job loss or some other life-altering event.

But when your financial life is stable, it may be time to move beyond this comfort zone to one that allows you to “flourish”, Lurtz says.

She says to do this you and your adviser should discuss the following questions:

  • What is possible now?

  • If money was of no concern how would you raise your overall level of satisfaction with life?

  • How could my finances be used to improve my physical and mental health?

  • What aspects of my character are represented in my finances?

  • How could I use my finances to improve or strengthen personal, charitable or professional relationships that I am most or least satisfied with?

Making important connections

There are many things that prevent financial advisers from having more connected conversations with you, their clients. One of these is the time it takes.

Rob Macdonald, head of strategic advisory services at Fundhouse, said if early in your relationship you and your adviser invest additional time in working out what you really want, you will both find it worthwhile, and your relationship will endure.

You only have one life and it’s not about money, Moller said. You and your adviser should frame things correctly so that money has the right place in your life, she adds.