How ‘life planning’ founder George Kinder thinks you should handle money

George Kinder wants everyone to be free.

At first glance, that concept of personal fulfillment or enlightenment might seem better suited to the realm of religion or spirituality than personal finance.

But Kinder, who is recognized as the father of the “life planning” branch of financial advice, has been preaching the connection between finance and freedom for decades.

In fact, his new book – “The three domains of freedom“- is a treatise on this subject.

“There are types of goals that are very inspiring to clients,” Kinder, who founded the Kinder Institute of Life Planning in 2003 after working for 30 years as a financial planner and tax advisor, said in an interview.

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He is perhaps best known for his “three questions”, which aim to help people discover the essence of their life goals.

“If you identify those and really paint a picture of what [someone’s] Life would be like if they had actually had that life, customers are on fire and they solve the financial problems quite quickly and quite easily,” said Kinder.

CNBC spoke with Kinder about life planning and why he thinks many people are missing the point when it comes to managing their money. This interview has been edited and condensed for clarity.

Greg Iacurci: What is the premise of the life planning movement?

George Kinder: The premise is that financial planning is about liberating a client. Everyone has a dream of freedom, and he should make that dream come true. And that applies to people who have no money, people who are in debt, but also to people who have a lot of money.

The focus shifts from money – which we worry about a lot and have to do many tasks – to freedom. What does it actually look like, what does it feel like and what are the steps to get there?

GI: What do you mean by freedom?

GK: I think each of us has our own sense of it, and the way we achieve this is through the three questions.

When people focus only on the money, they lose sight of who they really want to be and what they want to do. And often they think, “Maybe I won’t be able to do that until I retire, or maybe I’ll never get there. So I don’t really want to face it. I’ll just try to be more efficient in dealing with it.” [my] money.”

The premise of life planning is: no, you need to be focused on your dream of freedom and do some of these exercises to discover what that dream is. And then you’ll find that the money side of it goes much smoother because it doesn’t feel like a hard task.

GI: Do you think people blindly save money or try to accumulate wealth without really thinking about what it is for?

GK: Everyone I’ve met does that. This is endemic throughout civilization. People get lost in the everyday things and have no structure. Without really having that dream of freedom, the [financial] tasks are difficult to follow.

GI: The three questions help highlight what is most important to people and what they want to do with their lives. It makes them think about how they can use their money to achieve those goals?

GK: Precisely. It puts your eyes on the prize. People don’t actually know what they’re aiming for. I think ultimately they focus on things they read in financial magazines or The Wall Street Journal or personal finance blogs. They think they just need to fix their IRA and budget more. They get lost in that instead of always keeping their eyes on, “Okay, there’s a reason for this, and the reason is because I want to live this kind of life, and when I do these things [then] I can get there, and I can get there on relatively short notice.”

GI: But that doesn’t necessarily mean that the way people save is wrong, right? You hear these rules of thumb, as if you should save at least 15% of your income for your retirement. You just wonder why you do that?

GK: It’s not wrong. And besides, if you read good advice columns, or if you’ve read books or if you have an advisor, you know pretty well how to save, how to invest and all that. So it’s not wrong. But the focus is gone, so you are lost.

You said, “Save 15% for retirement.” Why do we use the frame “retirement”? What I would argue is that a much more powerful and applicable term for every human being is ‘freedom’. And freedom can happen within a year, but also within six years. It doesn’t necessarily have to do with what we normally think of as retirement.

GI: In short, don’t necessarily put off your goals and ambitions until you retire.

GK: Precisely. When we look at these things, we’re looking at how we can make this happen very, very soon. Usually by “very soon” I mean sometimes within a few months, and almost always within a three year period, and usually within a year and a half or so.

It may mean that you don’t get exactly what you want, but you are really on your way to it and you feel a lot of freedom from it.

For example, if your dream is to live in the countryside and you live in the city: Maybe you go on a two-week holiday to the countryside every now and then. [but now] maybe you do four or six weeks. Maybe you’re doing more work remotely. Maybe you’re already thinking about where you want to stay and how you can spend three months there in a year or two. So you are actively moving towards freedom as part of the program of financial planning, of your financial life.

GI: Do you think this is something that anyone could put into practice, or do you think this is more of a luxury that people with resources are better suited for? Perhaps they can achieve that freedom more easily financially.

GK: If we frame it in terms of financial freedom, then the people who have more resources are of course better able to do so.

But I grew up in a very poor part of the country. I was born in West Virginia and lived across the border in rural Ohio. I think what you realize when you grow up with people who are not well off is that you realize that each of them has a dream of freedom. Each of them wants to live a life that is extraordinary for them.

So I would say this is definitely available to everyone. And the main reason is that when you achieve the dream of freedom, if you do it right, you will get extreme energy. You become powerful around its realization. That’s why it’s not so much about money, but about building passion for who you really want to be.

GI: How does your new book advance your work in life planning?

GK: The core of the book is to provide inspiration and tips on how to make your own life plan, so that you live [it]. The second subtitle of ‘The Three Domains of Freedom’ is ‘Your Life is Your Own’. That part of the book is dedicated to inspiring the consumer to do it themselves, and if they can’t do it themselves, then to find a trusted person who combines these things to help with that.

There are two other elements. They may seem far away, but they really aren’t.

We only experience freedom in the present moment. It’s the only moment we ever experience. I devote a third of the book to how to master the present moment itself, and mindfulness plays a big role in that. In terms of personal finance, it helps because the more you are not twisted and torn in the present moment, the more you are not struggling or neurotic in some way, the more you are at peace and the more accessible your life is. decisions.

And then the last third [of the book] adopts and applies the concept of “fiduciary”. What if, in addition to being able to have financial advisors who are confidants, what if every institution, every business, every nonprofit, every government were a confidant for the truth, for democracy, for the planet, for humanity? What I’m saying is: let’s demand that they be confidants before their own self-interest. And if we did that, I think it would solve the madness we’re in.