What is Lifestyle Financial Planning?
Lifestyle financial planning involves building a financial plan that is geared towards supporting your current and future lifestyle choices. It incorporates many of the elements of traditional financial planning, but focuses first on your lifestyle aspirations and then builds a financial plan around those goals. It is still about the money, but it’s more about you.
The Key Principles of Lifestyle Financial Planning
Lifestyle financial planning involves first putting some thought into your lifestyle goals. These will be different for different people, but may involve: purchasing property; travelling during retirement; charitable giving; providing for family members; building an investment portfolio or luxury trappings such as new cars and fine dining. Whatever your personal lifestyle priorities, it is important to think long term and ensure that you adjust your plan as your lifestyle goals change.
Why Lifestyle Financial Planning Matters
Lifestyle financial planning helps individuals achieve financial freedom while maintaining their desired lifestyle. It provides a structured approach to wealth management through connecting lifestyle goals to the financial planning process. Lifestyle financial planning ensures that financial planning does not drift into the abstract and instead remains firmly rooted in someone’s actual lifestyle and future goals. Putting serious thought into lifestyle financial planning means your investments, savings and spending habits are all aligned with your long-term lifestyle aspirations.
Steps to Building a Lifestyle Financial Plan
The creation of a financial lifestyle plan should start with an assessment of your current financial situation. Tools such as consolidated reporting can be employed to help begin the process. Consolidated reporting provides a full picture of someone’s wealth by creating a financial statement that brings everything together. This approach gives you an umbrella view of your finances and makes managing your assets simpler. This can be followed by cashflow modelling, which examines your assets and debt along with income and expenditure. Gathering this information allows projections to be created on your future finances. These traditional financial planning tools can be combined with a wider focus on short-term and long-term lifestyle goals to create an effective lifestyle financial planning process.
The Role of a Wealth Manager in Lifestyle Financial Planning
An effective financial lifestyle plan should be composed by an experienced wealth manager. A wealth manager can help you to crystallise your life goals before putting a strong financial framework around those aims. A wealth manager like London & Capital can assist you with areas such as investments, tax, financial planning, estate planning and global reporting. It is important to remember that any financial plan needs to be updated at regular intervals as your priorities change.
Common Misconceptions about Lifestyle Financial Planning
Lifestyle financial planning is a versatile tool. There are several common misconceptions about it such as it exists only for ultra-high-net-worth (UHNW) individuals. Anyone can take on the principles of good lifestyle financial planning. It can also be used throughout someone’s life rather than just during retirement. Any kind of financial planning is more effective when it is considered earlier in life. Another common mistake about lifestyle financial planning is it is limited in scope, when in fact it is inclusive of all areas of financial planning, including risk management and tax strategies.
Can I Start My Lifestyle Financial Planning Now?
There is no time like the present to start lifestyle financial planning. In summary, lifestyle financial planning involves building a financial plan that is geared towards supporting your current and future lifestyle choices. It should involve assessing your current finances and forecasting your future financial priorities. This should all be done with a focus on your lifestyle ambitions rather than with a purely financial lens. Anyone who wants to create a lifestyle financial plan should make sure they have expert advice. At London & Capital, our advisers are experts in wealth management and would be more than happy to assist.
