Do you have enough? Understanding 'enough' in financial planning
How much is enough will vary from person to person. It will mean something different to everyone. It isn’t about how much will be enough for today, tomorrow or even next month. And it’s not about simply getting by. It’s about establishing what you will need – and want – for the rest of your life, so you can live life to the full. We understand from experience that this isn’t an easy question to answer.
Defining your ‘enough’
Defining ‘enough’ requires some soul-searching. What are your core values? What does your chosen lifestyle look like? What levels of security and freedom are you looking for?
When using this approach to financial planning, these questions help focus you on your goals rather than purely numerical targets. It’s about knowing what you want to achieve and then making a plan for how you will attain it. Not only are you looking at how to enhance your quality of life, you are also addressing financial concerns for yourself – and your family – down the line.
Once you’re decided on the answers to these financial life questions, you are ready to align your financial resources with your decisions and aspirations for the future.
Establishing a baseline
The first thing you’ll need to do is establish your current financial position by calculating all your income sources, assets, outstanding liabilities or debts. To work out your net worth, subtract your total liabilities from your total assets. Look at your total income and expenses to get a clear picture of your current financial situation.
Next, check that your financial resources align with your ideal lifestyle and goals, paying close attention to your spending habits.
Your financial goals
Naturally, you will need to take a personalised approach to working out your ‘enough’ as your needs and wants will be unique to you and your circumstances. A professional financial life planner will know which questions to ask to help you ascertain your number. They can then create a plan to help you achieve your own, individual goals.
When you are planning for retirement, it's important that you have enough financial resources to maintain your desired lifestyle, cover essential costs, and enjoy activities like travel without any financial stress. Retirement planning is about balancing long-term financial stability with personal goals and wishes.
Building your financial confidence
When you define your individual number – your ‘enough’ – you are able to use this as a guiding principle which aids your decision making, alleviates financial worries and leads to a better quality of life. Your number is not designed to be restrictive in any way. Quite the opposite in fact. It’s freeing and empowering. Merely a starting point which you can build upon. It will help you see what could be possible in your life and it will help you gain clarity on your financial future.
At Ascent Financial Planning, we are highly experienced in helping clients identify their ‘enough’. Our qualified advisers are on hand to answer any questions you may have on understanding ‘enough’ when financial planning.
