So much of personal finance is approached from a vertical perspective: accumulation of a pool of assets. This approach requires decisions that emphasize rate of return, amount saved, fees, taxes and minimizing expenses so there is more money to accumulate. This focus essentially says stockpile a mountain of ‘gold’ for the future – be careful when you get there because now it is all you have and you ‘cannot afford to lose it’. Unfortunately, with this approach, there is always an underlying fear of not having enough or of running out. Because the accumulation is for a date off in the distant future, there is a disconnect to basic human nature, which places more importance on things that are immediate and tangible.

What is the most effective angle for personal financial planning then? It is simply a 90 degree shift to a horizontal view. This approach will connect current income and expenses to ongoing income and expenses that cover a lifetime. It is a subtle difference with a significant impact in your overall thinking. Every financial decision, whether it’s to spend money on necessities today, or making an investment or lending decision with future implications, will connect to an immediately tangible and relatable number – the monthly income you currently use and the monthly income you require to support your lifestyle in the future.