Money discussions as a couple- goal planning

In my experience, it’s not commonly understood what a financial planner actually does. A lot of people I meet still think that a financial planner helps you pick ‘hot stocks’, but the reality couldn’t be any more different.

A good financial planner helps people who have experienced some success with their money take it to the next level. In most cases, this involves determining a set of lifestyle goals and putting in place a plan to make them happen (financially).

In determining lifestyle goals, I’ll regularly discuss techniques you can use as a couple to determine your goals. Things are constantly changing in life so these can change, but usually it is helpful to have had some discussions around what you would like to achieve.

If you’re unsure where to start in these discussions, I usually suggest a goal planning technique consisting of the following 5 steps.

STEP ONE: DISCUSS YOUR RICH LIFE

It can be daunting to discuss goals in life. What if you can’t afford them? What if you never have the time to do them? We are taught that goals that aren’t achieved are a failure. But this isn’t the right way to think about it.

Letting your mind dream of what’s possible is a learned behaviour and one which can be practiced.

A good exercise is to ask each other the following questions (the more specific the answers, the better):

• What would we do if we had all the money in the world?
• What would we do if we had 10 years to live (and are healthy for those 10 years) and the same money we have now?
• What would we regret if we died tomorrow?

This should start the conversation of what you would love to achieve in your life.

STEP TWO: DISCUSS WHAT YOU ALREADY HAVE IN PLACE

Now that you’ve opened up the conversation around what you want to achieve, let’s start discussing what you are already on track to achieve. This might be:

• Send the kids to private school
• Pay off the house
• Do the renovations to the kitchen

What are the goals you have been working towards so far, even if you didn’t actively decided on them?

STEP THREE: LIST THEM ALL IN ORDER OF IMPORTANCE

Depending on your list, you are likely going to be able to achieve some of these goals, but not all of them. This is where we need to start prioritising.

I suggest you write them all down in order of priority. Include in this list the goals that are non-negotiables you are already doing such as ‘pay for (insert) private school for the kids’ as well as things that make up your rich life.

Be honest with yourself. Is a yearly holiday more important than sending the kids to a particular school? Do you want to buy the 4wd more than you want to retire early? As a couple you are going to have different opinions and you can change your mind anytime you want.

Look inwards and think deeply about what is the most and least important. There is no one way to do life and you get to decide how you spend your money.

STEP FOUR DISCUSS WHAT YOU ARE DOING TO PRIORITISE THE MOST IMPORTANT GOALS

“A goal without a plan is just a wish”- Antoine de Saint-Exupery.

Now that you’ve agreed on the goal, work through the list and discuss what you are doing to achieve this goal. Assuming you’ll figure it out later will likely mean you never can achieve your goal.

You might want to discuss setting up a bank account and setting a certain amount of money towards it each fortnight or investing a certain amount for this purpose.

Whatever you do, just make sure your plan is actionable and will directly lead to the result you want.

STEP FIVE: CULL THE BOTTOM OF THE LIST AND DIRECT MONEY TO THE TOP

If you’ve gone through this exercise, you might find that you are unintentionally prioritising goals lower on the list (either with money or time) whilst not prioritising your more important goals.

The next useful step is to discuss what from the list you can cull. For example, you may have ‘replace the car’ somewhere very far down the list.

You may discuss this and choose to not replace the car. You have then freed up a fair bit of money which can be directed to your more important goals.

How much you cull and how much you retain is a personal decision, but I usually encourage people to cull as much as possible (until they feel uncomfortable) and then spend extravagantly on the areas that are priorities in their life.

One of my favourite finance commentators, Ramit Sethi, has a saying that you should “spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t”.

The more you cut and reduce costs in areas that aren’t important, the richer your life will be.

If you’re interested in further info on what a financial planner does, check out my blog post on the topic: https://www.bouncefinancial.com.au/blog/what-does-a-financial-planner-do/