Three Essential Elements of a Great Financial Plan

20150323_091018“Spring is the time of plans and projects”

–          Leo Tolstoy – Anna Karenina


Spring is always an exciting time of year. As the world around us awakens from the winter, we all seem to experience a bump in energy and commitment to the plans and projects we outlined at the turn of the year.

For those of us living in Minnesota, the relatively mild winter and early spring has been an extremely welcome change after the winter that never seemed to end in early 2014.

However, those of you on the east coast and in the western US are coming off extremely unusual seasons. On a recent trip to Park City, a fellow skier from New York was lamenting that they traveled all the way across the US for a ski trip when would have had better snow in Vermont.

Spring break is a common time of year to execute some of our plans. Unfortunately, because we choose our destination well in advance, we can’t always control the weather when those dates arrive. What we can control, however, is how we respond when our plans do not turn out the way we envisioned.

Not feeling in control can be unsettling. But just like you have snow shovels, umbrellas and emergency kits for various weather situations, your financial plan is designed to provide some reassurance and resilience during inevitable market and life volatility. We worked with you to create a plan that helps you keep your focus on the people, the causes and the passions that bring you the most fulfillment.

In his best-selling book, Drive, author Daniel Pink advocates for three “essential elements” that science proves motivating and fulfilling:

(1) Autonomy — the desire to direct our own lives

(2) Mastery — the urge to get better and better at something that matters

(3) Purpose — the yearning to do what we do in the service of something larger than ourselves.

As we work together through the financial planning process, we will always keep these three essential elements in mind.

Autonomy in your financial plan means you are on track toward financial independence. For some, that is the final push toward the finish line before you can retire. For others, that means focusing on the bigger yesses in life. Every time we say “yes,” we are saying “no” to something else. We all have different, but limited constraints on our time and energy.

A recent fortune cookie note read, “There are only 3 colors, 10 digits, and 7 notes; it’s what we do with them that’s important.” The best way to understand one’s priorities in life are to look at their calendar and their bank statements. Are yours pointing toward your bigger yesses?

Mastery means that you are creating the time and using your resources to pursue your life’s passions. For some, this may mean going back to school for advanced degrees. For others, that may mean adequately preparing and positioning the family finances to support a career transition or new business pursuit. It may mean carving out adequate resources to master a hobby – cooking, golf, woodworking, brewing, or gardening. Or it may mean using your money to help a troubled family member conquer their demons.

Real wealth is not entirely measured in dollars. Real wealth is comprised of the things that cannot be taken away from you – your intellectual capital, your emotional capital and your social capital. If you are consistently using your time, energy and money to work toward mastery in these areas, your financial capital will follow suit. People new to wealth (athletes, actors, lottery winners, inheritors) often end up worse than they started out because they have not developed the intellectual, emotional and social capital to manage the immense amount of money that has found its way into their life.

Purpose in your financial plan ought to go without saying. The point of planning and investing is not simply to have more money. While “retirement” may be a goal, it is what retirement stands for that makes it meaningful. The extra trips to visit grandkids, the ability to volunteer more, the chance to pursue mastery of the hobbies we have set aside while we worked, or the opportunity to fall in love with our spouse all over again are the things that make “retirement” meaningful.

We all know money does not equate to happiness. But the life experiences and pursuits we can use our money for can, indeed, lead to happiness. When we make our bigger yesses a focal point of the financial plan, the uncontrollable elements become less daunting and we gain an exponential degree of resiliency in our lives.