A client came to see me recently because she wanted to go part time but didn’t think she could afford to have less income. She works long hours and has sacrificed pursuing other interests for her career for a long time.
We went through her finances together and, as it happened, she could afford to work less. Realising that she had financial options was a great relief and helped her to consider other plans for her future.
In the end, she chose to carry on working full time for a little longer, but knowing that she could reduce her hours if she wanted to – that she had a choice – gave her a huge sense of empowerment.
Redesign and reshape
In the busy day-to-day we tend to forget that we do have choices. In truth, we all have the ability to redesign and reshape our working lives, whether that means changing career, working part-time, or taking early retirement.
An important part of the financial planning process is helping you to better understand your relationship with your work. Are you working to support dependants? Are you working to earn and save more? Are you working because you think you need to do so to be able to retire comfortably when the time comes?
It could be all, a combination, or none of these things but considering these questions with a financial planner can give you the clarity you need to redefine your goals around work and retirement and structure a long-term financial plan to support and achieve them.
Knowing your number
When it comes to retirement, it’s important to know ‘your number’. This is the amount of money you need to have in order to live the life you want when you stop working. A thorough audit of your current financial circumstances is necessary to calculate this, along with some financial projections of what your future circumstances are likely to be. This part of the process should involve cashflow planning with built-in ‘what if’ scenarios, along with some profiling to understand your capacity for risk and your attitude to investing.
An audit of your finances may reveal that you’re already on track for the future you want. Where this isn’t the case, your financial planner will help create a new financial plan, suggesting alterations to your saving and spending habits and solutions designed to deliver the results you’re seeking.
Working with a financial planner should offer you a non-judgemental sounding board, supporting your choices with clear financial projections of the impact and potential compromises you will need to make. Depending on what stage you are at in life, some simple restructuring of your investments can have a significant impact on your long-term financial health.
Fulfilment and independence
In summary, the first step to empowering choices is asking yourself what you want to achieve – be it a career change, a move to part time or, ultimately, retirement – and then working out how much you need to make this happen. Maybe you already have enough. If not, what do you need to do to make it happen?
Financial planning is an in-depth and structured process that helps you to reach a point in your life of fulfilment and financial independence. You might find you have more choices than you realise, and your ambitions may be easier to achieve than you think.
If you would like some financial planning advice, please get in touch.