What Does the Financial Life Planning Process Look Like?

You should create your life plan before you create your financial plan. Where life plans are created to help clients achieve their dreams, financial plans are developed to help clients achieve their life plans.


One approach to integrating financial planning and life planning might follow this 4-step process:


  1. Purpose—Clarify where you want to go
  2. Vision—Paint a mental picture of what it looks like
  3. Plan—Determine the steps to achieve your Vision
  4. Implementation—Execute the steps


Let’s look at each of these in greater detail.


Purpose    How much money is enough? What is success? What are the top priorities and values that should be fulfilled first at the sacrifice of others? Clarifying purpose, values and priorities is the single most important step in the financial planning process. Spending the time to determine what is most important to you is the best investment you can make in your life. Without it all the darts you throw in your life (spending and investing) will miss your bull’s eye. Without it the end of the game will be disappointing. Time will be wasted on acquiring money misdirected.  However, it is so difficult that most people avoid it. Most people are embarrassed that they don’t know what they really want that they avoid having this conversation with their financial advisors.


Vision    Exploring your possibilities through scenario building stimulates awareness of new opportunities, helping to identify what is financially feasible. This is a trial and error process.


Plan    This is the traditional financial plan. Sometimes this document is an inch thick. It includes documentation of the planning process, goals, financial strategies (tax investment, estate planning, etc.), to pursue and maximize your cash flow around your chosen scenario. It includes action steps to work toward goals with dates and assignments of responsibility for you and your advisors.


Implementation    Many financial plans are put on a shelf and never implemented.  However, a coach or financial life planning advisor can help you stay motivated, clear, grounded, and moving toward your vision so that you are energized to implement your planning.  This is where the coaching expectation of accountability provides you with the motivating confidence that you have a path and that you are not alone on the journey—that you can do it. This stage will involve revising the path to the vision a number of times due to changes occurring in the global environment or other obstacles discovered during implementation.


How Do You Integrate Life Planning and Financial Planning?

Life plans are based on the client integrating a number of life areas into their plans for a desired future, prioritizing and balancing them with one another. Financial plans also include the integration of a number of financial areas into the plan to efficiently manage your life plan.

Areas integrated into a balanced life plan may include:


  1. Personal Growth
  2. Significant Other/Romance
  3. Friends and Family
  4. Health
  5. Career
  6. Money
  7. Physical Environment
  8. Fun and Recreation


Areas integrated into an efficient financial plan may include:


  1. Investment strategies
  2. Tax planning
  3. Estate planning
  4. Insurance planning
  5. Retirement planning
  6. Education planning
  7. Charitable planning