Whether you are just starting up the lifestyle financial mountain, at the top looking down or descending the lifestyle financial mountain, the first step in lifestyle financial planning is to make a “wish” list of your desires and dreams. This can include questions such as “Where would I like to live?” “What kind of car would I like to drive?” “What kind of clothes do I like to wear?” “Where would I like to work?” and “What do I like to do for entertainment and recreation?” These can be helpful in pinpointing the lifestyle that makes you happy.
Next, you need a lifestyle financial plan that will allow you to acquire the money necessary to make your “wish” list a reality. It doesn’t matter if you’re far from retirement, near retirement or retired, your lifestyle desires and dreams need money. Money can come from earned income from work, retirement plans, social security, pensions or earnings on your investments. As in all financial planning, you must guard against inflation, taxes, wealth transfers and risk of loss of income due to death, disability, or legal action.
But you’re not done yet. You should have mileposts along the way to see how well you are progressing towards your lifestyle financial plan. A milepost measures how far along the route you are to achieving your lifestyle financial plan. In some instances, you will be ahead of schedule while in others you may be behind schedule. Or your “wish” list may change. Remember those curves? Be prepared to stop and reevaluate your “wish” list and change direction if necessary. It’s your life, so live it the way that best meets your desires and dreams.