When I started working as a financial planner in 1994, I came across a man called Nick Murray. Murray wrote a few books aimed at financial planners and spoke at a number of industry events. One of the concepts he talked about was the ‘Five Great Goals of Life’.
Murray has similar philosophies to me when it comes to investing – the money is simply a means to an ends. The important part of my job, and in developing a good financial plan, is understanding what you want your money to do.
He suggests there are five things that people are trying to do with their money. Some people have only one or two of these goals, others may have three or four and some clients can identify with all five. You may not feel strongly about all of them, but I’m sure you can identify with some of these.
The Five Great Goals of Life
- The endowment of a long, comfortable, and totally worry-free retirement, with no compromise in lifestyle, and no real concern about ever running out of money.
- The need / desire to intervene meaningfully in the financial lives of one’s children, during one’s lifetime and / or in the form of legacies.
- The ability to fund, in whole or large part, the education of one’s grandchildren.
- The capability to provide quality care to one’s parents in their later years.
- The ability to make a meaningful legacy to a much-loved school, church, charity or other institution.
(Source: Nick Murray: ‘The Excellent Investment Adviser)
Have a think about these five goals.
Which ones do you feel strongly about? How will you feel when you achieve them? What if you couldn’t achieve them – how would that affect you?
Planning for the Five Great Goals of Life
From a financial planning perspective, none of these goals will happen by accident. They each require careful planning, and time to come to fruition. In most cases, you may find that you need to save more today – and begin living on less – in order to have the capital to do the things you want in your future.
Take some time to think about what these goals mean to you. Don’t impose any limits on your thinking, but think about what you’d like to be able to do if money were no object.
When it comes to retirement planning and financial planning in general, it’s important to think about how important these goals may be to you.