Values and Connecting to Strategy

Yesterday we noticed that money is valueless by itself.  It is potential. Its value is its value in use. What will it get for you? Lifestyle. Security. Choices. 

You must know how to use it to your best advantage.

Start with what you value. Values are unique to each person. They are in two forms. What you believe and want together with your attitudes and the knowledge you can apply.

Do you demand independence? Do you want to share with family and others? Are you time competent? (You can defer results or maybe past fears dominate) Are you patient? Disciplined? Organized? Always learning? Do you seek to understand your economic and governmental surroundings?

Looking at money and its use as part of your much larger “Life Plan” will tie it together.

Use your unique personal and family values to determine what you want money to do for you. Spend the time on this because the rest of money management and control is just common sense and will be confused if you have not defined your overall purpose.

You probably noticed yesterday how much you should earn related to how much you want money to do for you. All of how money works is connected to what it is for – your definition. What others value is unimportant.

When you have a clear idea of your values, you can begin to make them more specific both in terms of the goal and the timing of that goal. The strategic part of the plan.

The strategic layer in your plan answers questions. All of them begin with “W”

  1. What do I want?
  2. When do I need it?
  3. Who else is involved?
  4. Where will we be when I need it?
  5. What do I have to get it with?
  6. What if?

Think about a retirement plan in these terms. Lifestyle sometime in the future. Security, or margin for error. Definition of resources that can apply to the plan. Where matters because of taxation and cost of living. What if I don’t live that long or get sick and lose my income or tax rates change or inflation is high?

With those sorted out, or at least a direction established, there are two more “W” questions.

Why and Why not.

Why will provide motivation to carry through on what you choose. Carrying through might include revision of resources used and the goal itself. It could require modified methods or a longer time. Life is uncertain, but if you know and believe in why,  you will persevere.

Establishing why not is for clarity. If you cannot point to the specific why not answer, you will second guess yourself about why and will tend to wander. Focus and clarity and motivation are powerful allies in your quest.

Few people get this layer fully correct first try. An advisor can add considerable value here so long as they rely on you as the planner and they as the assistant. At this level, they should help you find contradictions in your plan. Sometimes voids appear. 

It is easy enough to overlook things that are obvious to someone else with experience. It is especially easy to spend the same resource more than once. Implicitly spending the same dollar twice is a very common error. You cannot save what you spend. Beware debt commitments that require resources from the future to liquidate. Debt, especially credit cards, seem to create money.  They do not.They steal from the future.

Tomorrow we will do a little piece about the difference between getting money and earning money. The distinction is important in planning.

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario.  In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you.  don@moneyfyi.com  866-285-7772

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