Title: Life-Centered Financial Planning

Authors: Mitch Anthony and Paul Armson

Publication Year: 2021

Category: Financial Planning

Life-Centered Financial Planning Summary

Introduction

“Life-Centered Financial Planning” by Mitch Anthony and Paul Armson serves as a guide to transforming traditional financial planning approaches into life-centered methodologies that prioritize clients’ lives, values, and the outcomes that truly matter to them. It emphasizes the importance of aligning financial strategies with personal life goals rather than focusing solely on accumulating wealth.

1. Redefining Financial Success

Major Point:
Anthony introduces the concept of redefining financial success by focusing on well-being and quality of life rather than just financial metrics.

Example:
A family planning for their children’s education prioritizes the overall experience and personal growth of their children rather than just budgeting for tuition fees.

Actionable Step:
Individuals should create a “life-centered” balance sheet that lists both financial assets and life assets, such as health, relationships, and personal achievements, to ensure a holistic view of wealth.

2. The Life-Centered Planning Process

Major Point:
A structured life-centered financial planning process involves understanding clients’ stories, identifying their values, and mapping out their life goals.

Example:
During client meetings, advisors engage in deep conversations to uncover personal dreams and aspirations, such as starting a business, traveling the world, or early retirement.

Actionable Step:
Schedule regular life-planning consultations with your financial advisor to discuss and update life goals and how your financial strategies can support them.

3. The Importance of Personal Values

Major Point:
Understanding and aligning financial plans with clients’ core values ensures that their money is used in ways that create true fulfillment.

Example:
A retiree who values community service and education may choose to allocate part of their retirement funds to local educational programs rather than just increasing their savings.

Actionable Step:
Create a personal values statement that clarifies what is most important to you and use it as a guide for making financial decisions.

4. Establishing a Meaningful Retirement

Major Point:
A meaningful retirement is more about how you spend your time and less about having a large nest egg.

Example:
A retiree who planned to spend their retirement traveling but suddenly loses interest due to health issues finds new joy in mentoring young professionals, which gives their life renewed purpose.

Actionable Step:
Develop a lifestyle plan for retirement that focuses on daily activities, social engagement, and personal projects rather than just financial accumulation.

5. Life Transitions and Financial Planning

Major Point:
Financial planning should be adaptable and responsive to the various life transitions individuals experience, such as changing careers, having children, or dealing with unexpected health issues.

Example:
A mid-career professional facing a job loss uses their emergency fund and reassesses their financial plan to align with new career goals and potential training needs.

Actionable Step:
Set up a transition fund that can be used for life changes, and regularly review and adjust your financial plans to accommodate these shifts.

6. Emphasizing ‘Return on Life’ (ROL) Over ‘Return on Investment’ (ROI)

Major Point:
Focusing on “Return on Life” ensures that financial decisions enhance overall life satisfaction and well-being rather than merely increasing monetary returns.

Example:
A couple decides to spend a portion of their savings on a family vacation, creating lifelong memories, rather than investing it solely for future gain.

Actionable Step:
Evaluate major financial decisions by considering how they will impact your overall happiness and life satisfaction, rather than just their financial return.

7. Security in Financial Planning

Major Point:
True financial security comes from a well-balanced approach that includes emotional, psychological, and relational security alongside financial security.

Example:
Having a comprehensive insurance plan provides emotional peace of mind, knowing that loved ones are protected against unforeseen circumstances.

Actionable Step:
Conduct a security audit to ensure you have adequate protection in all aspects of your life, not just financial.

8. Regular Review and Adjustment

Major Point:
Financial plans should be living documents that evolve as life circumstances change.

Example:
An individual fresh out of college with student loans revisits their financial plan annually to update their budget and savings strategy as their career progresses.

Actionable Step:
Set a recurring annual appointment to review and adjust your financial plan, ensuring it remains aligned with your evolving life goals.

9. Holistic Health Approach

Major Point:
Financial planning should consider the impact of financial stress on overall health and incorporate strategies for managing it.

Example:
A high-stress professional uses a portion of their income to invest in stress-relief activities, such as yoga and meditation classes, which enhance their overall well-being.

Actionable Step:
Include wellness activities in your budget and view them as investments in your overall quality of life, rather than just expenses.

10. Intergenerational Wealth Planning

Major Point:
Helping clients plan for intergenerational wealth transfer ensures that their values and life lessons are passed on along with financial assets.

Example:
A grandmother sets up a family trust that includes not only financial assets but also stipends for educational purposes and social causes that align with the family’s values.

Actionable Step:
Create an estate plan that includes not just financial elements but also guidance for how future generations can benefit from and steward these resources in alignment with your values.

11. Behavioral Coaching

Major Point:
Financial advisors should act as behavioral coaches, helping clients understand and manage their financial behaviors and emotions.

Example:
An advisor helps a client avoid panic selling during a market downturn by providing historical perspective and emotional support.

Actionable Step:
Work with a financial advisor who provides behavioral coaching to help you make rational, emotionally sound financial decisions.

12. Creating Legacy

Major Point:
Life-centered financial planning encourages clients to think about the legacy they want to leave, beyond just monetary inheritance.

Example:
A philanthropist establishes a foundation in their name that funds scholarships for students in need, ensuring their legacy lives on through the lives they touch.

Actionable Step:
Define your legacy vision and incorporate it into your financial plan, identifying ways your resources can continue to make an impact after you’re gone.

Conclusion

“Life-Centered Financial Planning” by Mitch Anthony emphasizes the importance of integrating personal values and life goals into financial planning processes. This holistic approach ensures that financial decisions contribute to overall well-being and life satisfaction. By redefining financial success, focusing on meaningful retirement, adapting to life transitions, and prioritizing legacy and security, individuals can create a financial plan that truly enriches their lives.

By adopting life-centered financial planning principles, individuals can navigate their financial journeys with a more gratifying and purpose-driven approach, ultimately improving their quality of life.