ontrak Financial Planning

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Which Money Type are You?

From my experience, I believe there are just three client types.

They are:

Type 1 : The ‘Not Enough’s’ – their money is going to run out.

Type 2 : The ‘Got Too Much’s’ – they are going to have too much money.

Type 3 : The ‘Just Right’s’ – they have the right amount of money but might not realise it!

The ‘Not Enough’s’

This group of people are unlikely to have enough money to last their whole life. They need to know how much is ‘Enough’ and then to understand how to plan their future to avoid their money running out.

The Financial Services Industry hasn’t helped the ‘Not Enough’s’ as most financial advisers have only been interested in selling products, and earning an associated fee, when they should have been answering this much bigger question and planning properly for their clients’ futures.

If you’re currently a ‘Not Enough’ type of person, you are going to be unable to maintain your current lifestyle, which means your lifestyle will have to be ‘turned down’ unless something changes. The good news is that something can be done about it, step by step. Once you begin to understand ‘How much is Enough’ there is a strong motivation to do something about it. This is especially true for business owners who can utilise their greatest asset (their business) to help build their wealth (which will be the subject of a later blog).

The ‘Got Too Much’s’

These are people who have more than enough already, or are heading that way and are likely to go to their graves with too much money; who wants to be the richest man or woman in the graveyard?!

So, it all comes back to knowing how much is Enough to last your whole life through, based around the lifestyle you want. When you know exactly what your Enough figure is, you can plan your life accordingly – spending and gifting more and feeling good about it. Remember life is not a rehearsal and it’s important to do stuff while you’re still able and see the benefit in passing on money to those you want to help. It’s also an opportunity to create your legacy; help good causes and create something that lives on long after you’re gone.

Also, once you recognise that you’re a ‘Got Too Much’ person, you can reduce investment risk, which will bring you more peace of mind and less stress. Why try and make more money when you don’t need to, thereby creating a potential situation where the only person who ultimately benefits is the tax man?

The ‘Just Rights’

There are many people who have just the right amount of money for the rest of their life. The only trouble is they don’t know it, because no one has ever shown them that they actually do have Enough!

This group of people are more than likely to be stressing and worrying about money when they don’t need to be. They may even be taking too much risk which can potentially erode their capital if they have got the wrong investments in place.

You may well be one of these people – one of many possibly missing out when you could be enjoying yourself, working when you could be playing, or, still saving when you should be spending!

The money pages of the newspapers don’t help; the Financial Services Industry wants you to feel insecure, they want you to make sure you don’t know what your Enough figure is, so you keep reading their scaremongering articles helping them fuel their advertising coffers, and buying the wrong products.  By knowing you’re going to be OK you can relax, simplify your affairs and enjoy your wealth whilst ignoring all the media noise.

It’s the process of Lifestyle Financial Planning that will identify which type of group you fall into, setting out with clarity where you’re heading financially; and aligning a strategy to achieve and maintain your desired lifestyle. Such a process can truly be life changing.