I ask potential clients to describe their version of financial freedom (or financial peace) and how we can help them achieve this goal.
It’s extremely common for the answers to center on some sort of financial/investment success metric.
• Increase my investment returns to 10% a year consistently with minimal risk.
• Pay off all debts and have enough money to live comfortably.
• Grow my portfolio to $X,XXX,XXX.
Having specific numbers/goals like these is a great starting point but it masks the deeper reality.
Invariably, there are lots of unspoken – yet non-negotiable – constraints that come along with financial success metric.
People often lead with the money goals, but in reality it’s almost never the most important thing.
For example, let’s say a couple came to me and said:
“I want to grow my portfolio from $250,000 to $1,000,000 over the next 10 years.”
And I said:
“OK, invest your money in a diversified blend of low cost mutual funds with a 60/40 mix if equities / bonds. Add $3,000 each month to that investment and you should achieve your goal.”
LOL! Did I answer their question ? Yes. BUT… that is not really what they needed/wanted from me. What I should have asked is, “Why is having a million $ portfolio important to you?“
Turns out… it’s not just the facts that matters.
In fact, HOW to reach your “perceived” financial peace goal might not even be what they need from a financial planner.
People care a lot about non-monetary things like:
• Maintaining their current lifestyle
• Spending quality time with those they love
• More time to pursue activities they enjoy
• Mental / emotional peace
• More control over their schedule
• Flexibility to do work they enjoy
• Not doing work that they feel is tedious or boring (or unethical)
• And so forth…
Here’s the thing…
When you list out your financial peace objectives, be sure to include the non-monetary stuff that matters to you. In my 25+ years of helping people pursue financial peace, the vast majority of time it does not take as much money to provide clients a “financially peaceful” lifestyle as they expected.
Once you have a detailed description of what financial peace looks like to you, ask yourself:
“If I did have all this, how much money would I really have to make to be happy as a clam?”