3 key questions to help you get clarity in your financial planning

Last month, you read about the importance of clarity in financial planning, particularly if you are an expat.

You may run into issues in later life without clarity about how long you intend to live abroad, where you want to retire, and how this affects your family.

Fortunately, when you are clear about what you want in the future, you can plan accordingly and achieve those goals. However, it is important to recognise that achieving this level of clarity is not necessarily easy.

While you may have some idea of the lifestyle that you want to lead, you might need to think more closely about your priorities in life. When you identify what you truly value, you can build a financial plan with these things at the heart of it.

Ultimately, this makes some of the crucial decisions I discussed last month much easier.

Early on in my relationship with new clients, one of the approaches I sometimes take to help people gain this clarity before I create their financial plan for them, is to ask these three key questions.

1. What does your dream life look like?

People are often very practical when asked about their financial planning goals, citing aims such as saving for retirement, or investing and tax planning, for example.

A survey by Legal & General found that 94% of people said feeling financially secure for the rest of their lives was their main goal, and 81% prioritised being able to pay for care.

This security is an important aspect of financial planning and, when saving for retirement, it is useful to think about the lifestyle you are accustomed to. This ensures that you save enough to maintain that lifestyle without making sacrifices.

Yet, the bigger dreams that you have beyond basic financial security may give more insight into your priorities. That’s why I find that asking clients what their dream life looks like is a good place to start.

Imagine that you are financially secure and all your basic needs are covered for the rest of your life. How would you live your life? What would you do with your money? Would you change anything about your life as it is now? Consider the things that you’ve always dreamed of doing if you had no time or money constraints.

Perhaps there are places you have always wanted to travel to, or a new hobby that you never had time for? Maybe you have always dreamed of going skydiving or starting your own business?

Don’t hold back when answering this question. The aim is to determine what your dream life looks like. By doing this, you can build a list of the things that you are truly passionate about and discount the things that don’t matter.

2. What would you do if you only had 10 years to live?

Next, I would ask what you would do if you had limited time. Perhaps an illness has limited your life expectancy to the next 5-10 years. You may had planned to retire and start spending your savings in 20 years, for example, but what if you only had 5-10 years left to live? This time this questions assume that your financial situation is as it is today.

You likely wouldn’t be able to achieve every single one of your retirement goals, so you are forced to consider which ones you would prioritise.

This is useful because we don’t know what the future holds. If you put off big dreams and focus your financial plan on less aspirational things, you risk missing out on the truly important goals.

Fortunately, by considering what you would do if you only had 10 years to live, you can see whether your financial habits are truly in line with your wants in life. If not, perhaps your financial plan needs tweaking (or overhauling) accordingly.

3. How would you feel if you had 1 day to live?

Finally, I might ask you to consider how you would feel if you had one day to live.

While this may seem like a morbid question to answer, it encourages you to think, not about what you would do in your final day, but about what you would regret in life – unfulfilled dreams, things left unfinished or something or someone you didn’t get to become. This can be incredibly useful when trying to gain clarity about your financial plan.

If you only had one day to live, what would you be most upset about missing out on? For example, you may regret never visiting a certain place or not spending as much time as you could with your family.

It is rare that people say they wish they had worked more, earned more money, been tax efficient, or beaten a certain market benchmark or index (the latter two in this list being commonly cited ‘goals’ of prospective clients). Consequently, you start thinking about your wealth as a means to achieving your goals in life. Thinking about your last day on Earth also encourages you to stop putting off life goals and work to attain them now.

Often, when people think about their finances and their goals, they think in the long term. But even though future planning is important, your financial plan should also facilitate your ideal lifestyle in the short term too.

Build a financial plan around your intentional life

These three questions are designed to make you think intentionally about your life and what your key goals are now and in the future.

Ultimately, this ensures that you create a financial plan with your goals at the centre rather than just investing blindly with no context to what you are actually trying to achieve.

People tend to make the mistake of setting financial goals like “retirement saving” or “investing” first. They then consider what kind of life they can have once they reach those goals.

So, by using these three questions as a starting point, you can build your financial plan around your aims and ambitions and increase your chances of living your dream life in retirement.

Get in touch

If you are searching for clarity in your financial plan, it all starts with an initial consultation to answer these questions.

You can contact us by email or, if you prefer to speak to us, you can reach us in the UK on +44 (0) 208 0044900 or in Hong Kong on +852 39039004.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.