Please enjoy this great guest post from my good friend, Russ Ford. Russ owns and operates Wayfinder Financial in Indianapolis.
Wayfinder is a different kind of financial advisory firm with a different kind of fee structure. Forget suit and tie, in and out, polished presentations. You don’t want a sales pitch. You want holistic, strategic care over your life and money with a fee you can understand. That’s why I started Wayfinder, a full-service financial advisory firm offering everything you might expect from a traditional advisor. But we go further. Think life coach meets wealth manager meets friend you text when you’re faced with a big decision. We work with a different kind of person – those who are willing to invite someone into their mess, and those who see money as a means to an end, not something to be idolized.
I’m not going to lie. Trying to write about how to plan for 2021 has been hard–not because I don’t have stuff to say or planning techniques I think would be helpful, but because it’s impossible to write about planning for the year ahead without acknowledging 2020’s existence and accepting that there’s still a long way to go in this crisis.
I want to empathize with all of your struggles and write something that will help each and every one of you, but who am I kidding? If you’re grieving the loss of a loved one, or treading water financially after a job loss, or having to close your business, me telling you how to plan for 2021 in a blog post isn’t going to help.
If you’re in a situation like that, I want you to hear two things: first, it’s 100% OK to survive each day and not think beyond that and second, if there’s any way I, as a financial life planner, can help you survive, don’t hesitate to call, text or email me. I want to help!
If you find yourself in a situation where 2020 was hard, but you’ve got enough mental stamina and financial margin to start thinking about what lies beyond, then there are three things for you to hear: First, surviving each day and calling that a success is still 100% OK! Second, I’m still here to help if needed. And third, the rest of this blog post is my best “How-To” on planning for 2021 and beyond, summarized in three steps:
- Determine the Destination
- Set sail
- Course correct
Determine The Destination
“If you don’t know where you’re going, you’ll wind up someplace else.” – Yogi Berra
You might expect a financial guy like me to preach at you about the “destination” of retirement and how you need to max out your 401K and save, save, save. But, quite simply, that’s not me.
Of course, things like that are important, but because most of us spend 40+ hours a week trying to earn more money, we deserve more than a 4-minute cookie cutter approach when planning how we use that money. The more we throw money in different places, whether that be spending or saving, without thinking deeply, the closer we come to money becoming our meaning rather than a means to the life we dream of.
The Three Questions
With that in mind, I invite you to think deeply by doing this “Three Questions” exercise. Set aside some time and either write or type out your answers to these questions. If you have a significant other, it’s best to write your answers separately without collaborating, and then set aside at least an hour to share your answers with each other. Be as descriptive and specific as possible. At Wayfinder, we have our clients write out their answers, send them to us ahead of time without sharing first, and then read their answers aloud to each other, word for word, in a life planning session which lasts 1.5-2 hours.
- Imagine you are financially secure, that you have enough money to take care of your needs, now and in the future. The question is … How would you live your life? Would you change anything? Let yourself go. Don’t hold back on your dreams. Describe a life that is complete and richly yours.
- This time you visit your doctor, who tells you that you have only 5-10 years to live. The good news is you won’t ever feel sick. The bad news is you will have no notice of the moment of your death. What will you do in the time you have remaining to live? Will you change your life and how will you do it? (Note that this question does not assume unlimited funds.)
- This time your doctor shocks you with the news that you only have one day left to live. Notice what feelings arise as you confront your very real mortality. Ask yourself: What did you miss? Who did you not get to be? What did you not get to do?
(Where do these questions come from, you ask? I originally learned them when my wife and I answered the questions ourselves while working with our own financial planner, Scott Frank of Stone Steps Financial. The questions originally come from George Kinder, the creator of the financial life planning method.)
You might wonder why a financial planner like me is suggesting you answer such “touchy-feely” questions about life. If there’s one thing I know it’s this: life and money go hand in hand. In this crazy thing called life, we have three main resources–time, money, energy–and they all affect and feed off one another in various ways. Usually, the answers to these questions cause my clients to want to change the way they’re spending, investing, or saving each of these resources.
Given the changes to our world this past year, I think it’s important to add some questions for current context to your discussion:
- Do you feel like 2020 brought you and your family closer to the picture you described above, or further from it? Are your answers different now than they would’ve been before 2020?
- What do you want to keep from the changes that happened in 2020, and what do you want to get rid of as soon as you can?
If you’re anything like me, you dreamed up a million things while answering the questions above, and they could feel impossible to attain, either because some of your answers just aren’t feasible right now, or because trying to decide on which idea to start with is like playing a game of whack-a-mole. My words of advice for you are these: start with one, invest in escape hatches, and enjoy the journey.
Start With One
When I said that writing this blog post was hard, I wasn’t kidding. I spent hour after hour anxiously banging my head against the wall, thinking about idea after idea, but not really starting. While watching me stress out, my wife, Kathleen, kindly said to me, “You know you don’t have to write the Sistine Chapel of blog posts, right?” As simple as that sounds, I needed to hear that in order to stop overcomplicating the process. Instead of worrying about painting the Sistine Chapel, I just needed to pick up a brush.
The same can be said for acting on your life dreams. Pick one that’s feasible, break it down to an easy micro-action, and start! As a result of these conversations, we’ve had clients do big things they didn’t think they’d do until much later in life like move 45 minutes away to be closer to a national park or sell a rental property to buy a dream vacation property that doubles as a rental. We’ve had clients do many “smaller” things like starting a routine family movie night, going to an art class just for fun, seeing a counselor, giving more money away, and hiring a house cleaner. Maybe it’s a big dream, maybe it’s a little dream or simply a change, but chances are, there’s a small action that’s the very next step, before you even get to the steps down the road. Take the micro-action and see what happens!
Plenty of times, conversations like these result in saving specifically towards something big and meaningful rather than a big change right this second. From my experience, the best way to save is to make it very specific, and very automated so that it’s “habitual.”
Moral of the story: Don’t pick all. Don’t pick none. Pick one.
Invest in Escape Hatches
Progress isn’t linear. The more you can expect and plan for the downturns or the days where you feel super distant from your ideal life, the better you’ll be able to handle them and keep moving forward. The more you expect a straight line of progress, the farther the setbacks will throw you off.
If there’s one thing 2020 has made me think a lot about, it’s how to navigate the hard mental health days. One of the hardest things about 2020 for those that have been fortunate enough to not experience a loss of someone you love or a big financial hardship, is so many of our normal “escape hatches” have been taken away. Escape hatches look different for everybody, and they probably even look different for you depending upon what mood you’re in, but the more I think about it, the more I think answering these two questions for yourself are keys to success for any good financial life plan:
- What are your escape hatches?
- Did you lose a normal escape hatch in 2020?
- Did you find a new escape hatch in 2020?
- How can you invest in your escape hatches?
- Which escape hatches that you lost in 2020 do you want to re-focus on post-COVID?
- What are your escape hatches?
For me, I’ve realized the best monetary investment of any kind I can make is in talking to a counselor. I’ve tried to go without it at times, and I’m always better when I’m not trying to go it alone. This is an escape hatch I plan on continuing to invest in. Reading fiction and getting outside without a phone have been 2020 escape hatches that I want to keep, and having beer, playing board games or working out with friends, and family travel, are escape hatches that I will re-invest time and money in post-COVID.
If you have a significant other, one thing you’ll notice is escape hatches are often different for the two of you and often take place apart from one another. If you’re someone who feels guilty about taking care of yourself instead of prioritizing your family, please don’t let that stop you from taking care of you! You will be better for your family if you’re a better individual.
Enjoy The Journey
“I heard this story about a fish. He swims up to an older fish and says, ‘I’m trying to find this thing they call the ocean.’‘The ocean?’ the older fish says. ‘That’s what you’re in right now!’‘This?’ says the young fish. ‘This is water. What I want is the ocean!’ – Disney Pixar’s Soul
When talking about dreams and big life goals or changes, perspective is always important. This little story says it better than I could ever say it: don’t get so caught up in the destination of your dreams that you forget to see the beauty of each moment along the way. If there’s one constant theme to the answers to the Three Questions we hear from clients, it’s more time with family, and more time for self, and the big dreams usually are just a version of enhancing those. Enjoy the opportunities you have if the big “enhancements” aren’t ready yet.
Again, progress is not linear. As you enjoy the journey toward your destination, you’ll quickly realize you want and need to make changes! Again, this is ok, and you should expect it. You might even realize that you were completely wrong about your dreams. This is also ok! That’s why planning is a process, not a product. With that in mind, it’s important to be intentional with a plan so you can continually reevaluate your direction and your enjoyment of the journey.
The two most important ingredients to stay on track are having something to review, and a time to review it. Creating something as simple as a one page plan with some bullets based on your answers above written in Sharpie and hung on your fridge is one of the best ways to “have something to review,” and agreeing on a habitual time to converse about what’s going well and what can be improved is the best way to review it. The first “one page plan” and the first “review” do not have to be the Sistine Chapel – just start by picking up the brush!
Do you want to learn more? You can visit Wayfinder’s website or make an appointment with Russ. You can also send an email (firstname.lastname@example.org) or pick up the phone and call him (317-757-9885).