When it all boils down to it, financial planning is all about effective resource allocation. Most people tend to think about this in terms of how they allocate their money, but there is another resource that I think is more valuable – time. Think of it this way, it’s possible to make more money, but it’s not possible to make more time.
I recently wrote another blog post about priorities, and what we spend our money on. In this I made the point that we can sometimes have a disconnect between what we say are our priorities, and what we are actually spending our money on. Whether we like it or not, what we say we spend our money on is what we would like our priorities to be, and what we actually spend our money on is what our priorities really are. So what happens when we look at this from the perspective of how we spend our time?
Most people would agree that money isn’t the most important thing in the world. In fact, when we really break it down, I think we could actually say that money by itself really isn’t that important at all. The really important thing is what money allows us to do. If your priorities are spending time with your family, and enjoying life, money is only useful in terms of helping you to achieve these goals. Given that money isn’t the most important thing in the world, I think it’s safe to say we shouldn’t be spending most of our time thinking about it.
However, I also think that we need to make sure we have enough money to do the things that are important to us. In this sense, money is a bit like oxygen – it’s not really that important until you don’t have enough, but if you don’t then it’s the only thing you can think about. Based on this, we can see that money isn’t completely unimportant, and so we should probably be spending some of our time thinking about it.
So in the end, like many things in life, we end up with a position where neither of these 2 extremes is ideal. We don’t want to spend too much time thinking about our money, but we also need to make sure we’re spending some time. In addition to this, the amount of time we spend on financial planning will also be dependent on our age and stage, as well as our financial situation. For example a couple in their 50’s, who hope to retire in the next 5-15 years, will need to be looking at this more often than a couple in their 30’s, who just wants to pay off their mortgage and get set up to retire at some stage in the distant future.
This is where having regular reviews with a financial planner can be relaxing. Most people wouldn’t think about a financial planning appointment as relaxing, but this is a common thing we hear from our clients. By having regular review appointments set to occur often enough based on their needs, our clients know in advance that they have already allocated this time to make sure they are thinking about the bigger picture of their financial situation. This helps a lot with peace of mind. There’s no need to lie awake worrying about whether there’s anything you need to do differently, when you know you’re going to be meeting with your financial planner soon to discuss this anyway.
Having regular financial planning reviews is like budgeting enough money to be deducted from your pay automatically to save for retirement. Because you know that it’s already organised, and that you have worked out the appropriate amount in advance, you don’t need to think about whether you should be doing more or less.
Written by Dallas Davison.
Dallas Davison, Michael Hogue and Ali Hogue.