Monthly Archives: June 2018

Giving: How to Do The Most Good Without Disrupting Your Financial Plan

Many studies have shown that charitable giving provides greater happiness than buying more stuff. Eventually, you get used to your fancy new car, and the level of  enjoyment it provides goes down. But giving forges feelings of connectedness and community that don’t fade away.

Incorporating charitable giving into your financial plan is a great way to make sure that your generosity is aligned with the things that are most important to you. Some forethought about these key issues will also make sure that your good intentions don’t throw off the rest of your own long-term planning:

  1. Have a purpose.

The most effective charitable giving is thoughtful and intentional. It may be helpful for you and your spouse to ask yourselves some questions that will narrow your focus, such as:

  • Do we want to give to a national or local cause?
  • Are there pressing issues in our community that we feel we can help impact?
  • Do we have any personal connections to causes, such as medical research or support for the arts?
  • Do we want to support friends or family by contributing to causes that impact their lives or fulfill their passions?
  • Do we want to support a religious organisation, such as our church?
  • Are our charitable impulses motivated by on-going problems, such as education or homelessness, or would we rather position ourselves to react to events such as natural disasters?
  1. Do your homework.

Once you’ve settled on a cause, do some research on potential recipients. Visit the local charity you’d like to support and meet with its leadership team. Is the organisation running itself responsibly? Are there good, competent people in charge? Will these people get the job done? Don’t sink your money into a well-intentioned black hole.

If you’re looking to give to a national organisation, keep in mind that even some of the biggest names have come under fire lately from watchdog groups for misusing donations. Make sure you’re giving to an organisation that’s doing what it says it’s going to do with your money.

Also, remember that big organisations – even charities – must manage things like overheads, salaries, and insurance. Are you happy supporting the organisation itself? If you want to see your money in action more visibly, you might be happier giving locally.

  1. Beware the internet.

Whenever something bad happens in the world, our inboxes and social media are flooded with donation links. Read before you click. Be especially wary of crowd-funded campaigns on sites like GoFundMe. The cause may sound worthy, but these sites do not provide meaningful oversight on every campaign. Your money could be going to a cause, or it could be going straight into a scam artist’s pocket. You’ll never know

Is Your Money Being Used to Improve Your Life?

There’s a movement toward redefining money: instead of accumulating money for what it can buy, more of us want to use money to live the best life possible with what we have––a concept known as Return on Life™ (ROL).

With ROL, money becomes a tool to help you live the life you want. Accumulating as much wealth as possible is no longer the primary objective of your financial plan.

The traditional path to saving and investing has been to focus on the future (retirement), and rely solely on numbers and return on investment (ROI). However, this approach often can be misleading because it doesn’t consider your individual circumstances. “Beating the market” is often an artificial objective because it is not likely to have a substantive impact on your unique situation. Consider this: what does beating the market by one percent less (or more) mean to how you live your life? Do market returns have an impact on how you live your life?

What is relevant is developing a financial plan that considers the following:

  • How much do you currently have invested?
  • What is your current cash flow?
  • What transitions are you currently experiencing, or expect to experience (examples include paying down debt, divorce, concern about illness, job loss, retirement, purchasing a home, providing financial assistance to a family member)?
  • Do I feel comfortable with my level of financial obligations (examples include housing expenses, leisure activities, and healthcare expenses)?

By incorporating these factors into your planning, we can begin to understand what needs to change (or not change) in order to live the best life possible without overextending yourself. You may even be pleasantly surprised to learn you can enjoy the fruits of your labours sooner than expected!

Money does not exist for its own sake. Money exists as a utility that we use to improve our lives.  How your returns compare to any index, fund, investment category, or another person are less consequential than whether you are meeting your own ROL goals. Measure your success against your objectives, not someone else’s. You don’t need to keep up with the Jones’—or anyone else.

In order to enjoy ROL, you need to understand where all your money is coming from and where all your money is going––and why.

Understanding the “why” enables us to create a plan that works for you and your individual circumstances. You may be living above your means and need to make changes to your lifestyle. Or you may already have enough, and be able to take a trip or enjoy another experience you have been putting off.

Together we can address the following questions:

  • What challenges and opportunities are you currently facing?
  • What key transitions are looming on the horizon?

Your answers to these questions will determine the inflow and outflow of money, as well as your financial progress or decline. Knowing your age, and how long you expect to live isn’t enough to develop a financial plan that works.

With ROL, you don’t give up the best of life or the best parts of yourself just to get money. The money is there to serve you, not vice versa. Instead of focusing on someone else’s definition of success, write our own. ROL puts quality before quantity by managing your assets in a way that improves your life and provides peace of mind.

In traditional financial planning, the primary components include asset, risk, and debt management, as well as tax, estate, and income planning. All of these areas are essential and necessary for a strong financial plan, but there is more to developing a strong financial plan than numbers.

We all have different values and principles regarding money. Each of us has a history, present circumstances, and future hopes that are unique. By focusing only on numbers, we miss enjoying life now and in the future because we only concentrate on accumulating wealth. A financial plan designed with ROL as its foundation is designed to build freedom, relieve the pressure of ROI-focused planning, and ensure your plan meets your goals.

There is no greater freedom, and no greater wealth, than living the best life you can with the money you have.

 

There is no such thing as Plain Sailing

Embarking on a financial plan is like sailing around the world. The voyage won’t always go as planned and there will be rough seas, but the odds on reaching your destination increase greatly if you are prepared, disciplined, patient and well advised.

A mistake many inexperienced sailors make is setting sail without first having charted a course to embark on or without a clear sense of direction and once they finally decide on their destination, they find themselves lost at sea, in the wrong boat with inadequate provisions.

Likewise, in your financial planning journey, you need to decide on your goals. A first step might be to consider whether these are realistic and achievable. For instance, whilst you may long to retire to the South of France, you may not be prepared to sacrifice what you want to do today to satisfy tomorrow’s longer-term goal.

You need to ensure you have the right planning tools to get you there. Have you planned for contingencies? What degree of bad weather can your plan withstand along the way?

The key to a successful voyage is a good navigator. A financial adviser is like that, regularly taking coordinates and adjusting, if necessary. If your circumstances change, the adviser may suggest you re-plot your course.

As with the weather at sea, markets can be unpredictable. A sudden squall can whip up waves of volatility, tides can shift, and strong currents can threaten to blow you off course. Like a seasoned sailor, an experience adviser can help navigate you through these conditions.

Once the storm passes, you can pick up speed again. Just as a sturdy vessel will help you withstand