When you’re working out what to do with your money, it can be hard to set accurate priorities.

Realistically, you should be saving and investing in such a way that ultimately makes you happy. Yet, according to life insurance company Aegon, only one in four people have ever considered what brings them joy and purpose.

This seems almost short-sighted; after all, the things that bring you joy and purpose are arguably the most important things in life.

That’s why you should be building joy and purpose into your financial strategy, using your money to help you achieve those goals.

Ask yourself: what makes you happy?

When we’re thinking about joy and purpose, what we’re ultimately talking about is happiness.

Try asking yourself these very simple questions: what makes you happy? What gives you joy and purpose? What makes you wake up with a smile, and go to bed at night content?

This will be entirely personal to you, and it could be truly anything. Some people target the luxury of taking a trip around the world on a six-month cruise, relaxing while visiting some of the most impressive and beautiful cities in the world.

For others, it might be as simple as staying at home and spending time with their grandchildren, more than content to just watch them grow up.

The point is that happiness, joy, and purpose are all subjective and personal. That’s why your plan for your money should be just that: personal and specific to you.

Your money can help you reach your goals

It can be easy to think that your life goals should be determined by how much money you have, particularly when you’re in your working life.

But actually, it can make far more sense to see this the other way around. Rather than how much you have determining how you live your life, it’s your lifestyle that will determine how much you need.

Think back to the answer that came to mind for you when you thought about what makes you happy. That focal point for your personal happiness should be the target for how you want to live your life.

Your money is simply the vehicle that drives you towards those goals.

Working out how much you need

Once you’ve spent some time figuring out what you want to achieve in life, you can start mathematically working out how much money you’re going to need.

In Aegon’s Financial Wellbeing Index, they cite government projections for how much individuals will need to live in retirement, based on their current earnings.

According to those calculations, an individual earning £27,000 a year could need 67% of their income a year in later life, a total of £18,090.

Meanwhile, someone earning £56,000 could need 50% of their income, which would be an annual income of £28,000.

These benchmarks are interesting, but they’re not specific to the individuals. They don’t consider that people have different ideas of what they want out of life.

To figure out how much you’ll require to live your ideal lifestyle, you need to work with a financial planner to create a full cashflow model that visually shows you exactly how much you’ll receive from all your assets. Then you can see whether it will last your lifetime when you start spending it on the things you really want.

Finding strategies to get you there

Once you have a figure in mind, you can start looking at what you can do to get to that level.

You can look at whether or not your current saving and investing strategies are sufficient for achieving your goals, or whether they need to be redesigned to give you the boost you need.

For example, you may be prioritising cash savings, investing small amounts each month, and also making minimum pension contributions.

But, if you increased your pension contributions and reduced how much you hold in cash, you could make the most of pension tax relief and investment returns. This might boost your retirement pot for later down the line.

The key is to create a balance between living for the now and maintaining your current lifestyle, while also making provisions for what you want in the future.

Work with us

At Lightside Financial Planning, we can design a personalised financial plan that helps you to achieve your goals.

We’ll help you define your goals using the things that bring you joy and purpose. Then, we’ll work with you to figure out how much you need, and what sort of methods you can use to get there.

If you’d like to find out more about achieving what you want in life with the money you have, please speak to us.

Email info@lightsidefp.co.uk or call 0151 372 0161 to find out what we could do for you.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.