This is part one of the series Financial Planning 101.
Financial planning is about anything that impacts your financial situation. In other words, financial planning is almost everything you do or plan to do. Unfortunately, many think financial planning is just about money. That’s not all there is — money’s just the start.
To understand this, we have to first look at what money even is in the first place.
What is Money?
Money is anything that’s accepted as a payment for products and services. In the context of our society, it’s paper money and coin change. In ancient times it’s been everything from bars of gold to bi round rocks. Money changes — but what it represents doesn’t.
Typically, money simply represents something that is valuable. If you have a one-million dollars, then your “paper money” symbolizes that you have a claim to a large amount of value. The money represents houses, cars, gadgets, food, etc. You just have to make good on the claim — or “spend” the money.
So what does this have to do with financial planning? A lot. Financial planning is any plan that deals with your money — and what your money represents. That means financial planning is transportation planning, food planning, vacation planning, career planning, business planning, entertainment planning — financial planning includes any plan that deals with “stuff” or wealth.
What’s the Point?
Financial planning isn’t just about getting as much money as possible, or getting as much stuff as you can. That’s silly. Financial planning is about creating a material plan for your life that fits what you want to do and who you want to be. It’s that simple.
That means that for many people, the traditional “job” won’t work. For some, working night-and-day doesn’t cut it. For others, “chilling” won’t work. My psychological profile simply requires that I have a major productive project — otherwise I feel completely incomplete. But some people are the opposite.
Financial planning isn’t a “one-size fits all” ordeal. If anything, it’s the exact opposite. Financial planning is life planning. We’ll talk more about this in two more articles in this series. If you haven’t already subscribed, make sure to do so below.
Wealth isn’t just the paper stuff we use at the store, or the “ones and zeros” in our bank account. Money is more; dollars and cents are just currency. The TV you choose, the car you buy, the house you rent, the vacation you take, the job you have, the flavored coffees you drink — these are all part of your financial plan.
Your financial plan isn’t about getting lots of stuff you don’t want — it’s about creating a lifestyle that’s perfect for you. That might include lots of work, lots of stuff, or none of the above. That’s the beauty of it… it’s your plan for your needs.