The 4 crucial questions to answer before designing your financial plan

Planning your financial future inevitably involves a lot of questions.

When we’re putting your plan together, I’ll ask you plenty – questions around your lifestyle, financial priorities, aims, attitude to investment risk, and no end of others. It’s a natural and healthy part of the process.

Likewise, you’ll have plenty of questions for me. Many of these come early in the client-adviser relationship as you’ll unload a lot of the queries that you’ve accumulated during your financial journey to date. I always encourage this. Being challenged with questions is part and parcel of being a planner and helps to ensure the plans we put together for you accurately reflect your needs and aspirations.

Answering each others’ questions will help us put together an effective and robust plan for your financial journey.

But before we get into the granular details of questions and answers there are some key values that will underpin all your financial plans.

We work out your values by considering four questions. By establishing your answers to these at the outset, the foundations of your planning process will fall into place.

1. What do you want out of life?

This is an ongoing question, so there’s not a single hard and fast answer.

At this stage in your life journey, you may only have an outlined idea. However, as you go forward, you’ll start to develop your thoughts and get a clearer idea of your priorities.

By establishing even just an initial outline, we can structure your financial plans to optimise the chances of getting what you want.

Alternatively, you may have a very clear idea of where you want to get to and what you want to achieve.

In both circumstances, we can also ensure your plan is flexible enough so you can react to changing circumstances, enabling you to stay on track.

2. What is “enough”?

You’ll have read my thoughts about how you define “wealthy” and knowing if you’ve got “enough” in a previous article, so it may be useful to have another read through that when you’re considering this question.

It is clearly subjective and, as with all the questions here, the answer will be entirely unique to you. Usually it’s focused on retirement – what you consider “enough” to be in terms of being able to fund the life you’ve got in mind when you stop work.

But it can cover a whole series of events before then.

For example, what will “enough” be in terms of your family? This can start with the amount of support you want to give your children as they are growing up – school fees, the cost of university, and then help with buying a property.

But it then leads on to your attitude to inheritance and intergenerational finance, including Inheritance Tax planning.

To a great extent, it will be more about your overarching attitude and what you expect in terms of your future lifestyle rather than actual amounts of money.

As we’ve established, everyone’s attitude is different and everyone has a different definition of what “enough” is. You may be happy with just enough to fund a very simple lifestyle or, alternatively, you may be highly acquisitive and want the best lifestyle money can buy.

3. Do you feel you’re in control?

At a very superficial level this question relates to how you manage your money and how comfortable you are with your current financial situation.

Not feeling in control is a common scenario. According to a survey reported by MoneyAge, only 34% of people in the UK feel they are in control of their finances.

Beyond that, however, it’s more about your attitude to money. It also considers the role money, and your wealth, play in your life.

To answer this question properly can take honesty and self-awareness. Again, there’s no correct answer – and we aren’t going to be judgmental.

The answers you give can help inform your financial planning process. The process can be tailored to reflect your feeling about how in control you feel and give you the reassurance that there’s an element of security built into your plan.

4. What will happen when you retire?

The process of retiring could well be one of considerable upheaval for both you and your family.

Moving from a lifestyle of working and earning a regular salary to stopping work and not being able to rely on that regular income each month can be daunting.

So, this question is very much about you being comfortable with the changes that you’ll go through when you do retire. It encourages you to start looking forward to, hopefully, at least 20 years of a more relaxed lifestyle.

Our aim will clearly be to put together a financial plan that gives you the best possible opportunity to ensure your retirement years are comfortable and free from financial stress.

Get in touch

I can work with you to help you formulate your answers to the four core questions you’ve read about here.

To find out more, please give me a call on 07769 156 250.

Please note

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.

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The Financial Conduct Authority does not regulate school fees planning, taxation & Trust advice and Will writing.