How “life planning” founder George Kinder thinks you should manage your money

George Kinder wants everyone to be free.

At first glance, that concept of personal fulfillment or enlightenment may seem more suited to the realms of religion or spirituality than personal finance.

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

In fact, his new book — “The Three Domains of Freedom” — is a treatise on the subject.

“There are kinds of goals that deeply inspire clients,” Kinder, who founded the Kinder Life Planning Institute in 2003 after three decades as a financial planner and tax adviser, said in an interview.

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

“If you identify them and really paint the picture of what (someone’s) life would be like if they had that life, clients are on fire and they solve their financial problems pretty quickly and pretty easily,” Kinder said.

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

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

George Kinder: The basic premise is that financial planning is about giving a client freedom. Every person has a dream of freedom and should live it. And this is true for those who have no money, those who are in debt, and those who have a lot of money.

The focus shifts from money—where we have a lot of anxiety and there are a lot of tasks to do—to freedom. What does it actually look like, how does it feel, and what are the steps to get there?

GI: What do you mean by freedom?

GC: I think each of us has our own feel for it and the way we get to it is through the three questions.

If people only focus on money, they lose sight of who they really want to be and what they want to do. And often they assume, “Maybe I can’t do this until retirement, or maybe I’ll never get there. So I don’t really want to face it. I’ll just try to be more efficient with (my) money.”

The premise of life planning is that no, you should be focused on your dream of freedom and do some of these exercises to discover what it is. And then you’ll find that the money part goes much more smoothly, because it doesn’t seem like an onerous task.

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

GC: Everyone I’ve met does this. This is endemic throughout civilization. People get lost in the day-to-day stuff and have no structure. Without truly having that dream of freedom, (financial) tasks are hard to follow.

GI: Do the three questions help highlight what is most important to people and what they want to do with their lives – do they get them thinking about how they might apply their money to achieve those goals?

GC: Exact. Keep your eyes on the prize. People don’t know what they’re after, really. I think they end up targeting things they read in financial journals or The Wall Street Journal or personal finance blogs. They think they just need to fix their IRA and budget more. They lose themselves in it, rather than always keeping an eye on, “OK, this is for a reason, and the reason is that I want to live this kind of life, and if I do these things (then) I can get there and get there in a relatively short period of time.”

GI: But that doesn’t necessarily mean that the way people save is wrong, right? You hear these general rules like you should save at least 15% of your income for retirement. Just wondering why you’re doing this?

GC: It is not wrong. And what’s more, if you read good advice columns, or if you’ve read books or have an advisor, you have a pretty good idea of ​​how to save and how to invest and all that. So it’s not wrong. But the focus is off, so you’re lost.

You said, “saving 15% for retirement.” So why do we use the “retirement” framework? What I would argue is a much, much stronger and more appropriate term for every human being is “freedom”. And freedom could happen in a year, it could happen in six years. It doesn’t necessarily fit what we normally think of as retirement.

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

GC: Exact. When we look at these things, we look at how we can make this happen very, very soon. Usually by “very short” I mean sometimes it’s within a few months and it’s almost always within three years and usually it’s within about a year and a half.

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

For example, if your dream is to live in the country and you live in the city: maybe you take a two-week holiday every now and then off in the country (but now) maybe you do four or six weeks. Maybe you do more remote work. Maybe you’re already looking at where you want to live and figuring out how, in a year or two, you can spend three months there. So you are actively moving towards freedom as part of your financial planning program, your financial life.

GI: Do you think this is something that everyone could put into practice, or do you think it’s more of a luxury that people with means are better suited to? Perhaps they are able to achieve that financial freedom more easily.

GC: When we frame it in terms of financial freedom, then yes, of course, people who have more means are more capable of it.

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 an extraordinary life for them.

So I would say this is available to everyone. And the main reason is that when you achieve the dream of freedom, if you do it right, you become extremely energized. You become vigorous around achieving it. That’s why it’s not so much about the money as it is about building the passion of who you really want to be.

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

GC: The centerpiece of the book is providing inspiration and advice for making your own life plan so you can live it. The second subtitle of The Three Domains of Freedom is Your Life Is Yours. That part of the book is dedicated to inspiring the consumer to do it themselves, and if they can’t do it themselves, then find a fiduciary to put these things together to help with that.

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

We experience freedom only in the present moment. It’s the only moment we ever live. I dedicate a third of the book to mastering the present moment itself, and mindfulness plays a big part in that. In terms of personal finance, it helps because the less twisted and torn you are in the present moment, the less you’re struggling or neurotic in some way, the calmer and more approachable you are. decisions.

And then the last third (of the book) takes the notion of “fiduciary” and applies it. What if, in addition to being able to have financial advisors who are fiduciaries, what if every institution, every corporation, every nonprofit, every government was a fiduciary of truth, of democracy, of the planet, of humanity? What I’m doing is saying, let’s ask them to be fiduciary, ahead of their own interest. And if we did that, I think it would solve the madness we’re in.