If we had to pick one overarching metric to a successful financial plan, it would be that our clients do not run out of money. Most of the long-term cash flow planning we do for clients focuses on them not running out of money. A plan is deemed successful if they are projected to still have money in the bank at the end of their life. Certainly, this is the key component to a successful financial plan, but if we are solely focused on not running out of money, we might miss out on another important aspect to an effective life: maximizing the impact of your money while you are alive.

A financial advisor friend of ours puts it this way, “Our job is to help you live between the two guardrails of not running out of money and maximizing your impact while living”. That framework properly balances the natural tension between these two goals. How do you live and give with greater impact without being irresponsible or reckless? We think these three simple steps can help:

1. Know Your Values – You need to know what is most important to you to determine where your money might have the most impact, and of course, this is different for each of us. A good starting point is to list the most fulfilling spending decisions you have made. What did they have in common and how can you replicate them?
2. Plan Conservatively – Having a plan built with conservative assumptions increases your chances of not outliving your money while being able to take the unexpected bumps along the way. It is easier to figure out how to live with more than what to do with less.
3. Be Opportunistic – With a conservative plan, you can feel free to spend money on impact causes when the opportunities arise. Whether it is a family/friends vacation, a unique giving opportunity or a once-in-a-lifetime purchase, knowing you have room in your plan allows you to capitalize when you have a chance.

Which side of the guardrail are you living on, and how can we help you stay balanced?