How Life Planning Founder George Kinder Thinks You Should Manage Your Money

George Kinder wants everyone to be free.

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

But Kinder, who is known 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 Spheres of Freedom, is a treatise on the subject.

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

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

“If you identify those and paint a real picture of what someone's life would be like if they actually had that life, you'll find that clients are very happy and solve financial problems very quickly and easily,” Kinder said.

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

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

George Kinder: The basic idea here is that financial planning is about getting the client to freedom. Every person has a dream of freedom, and they should live that dream. This applies to people who don't have any money, people who are in debt, and people who have a lot of money.

The focus shifts from money—where we feel so much anxiety and so much to do—to freedom. What does freedom actually look like, how does it feel, and what are the steps to getting there?

A: What do you mean by freedom?

GK: I think each of us has our own feeling, and the way we get there is through the three questions.

If people focus only on money, they lose track of who they really want to be and what they want to do. They often assume, “Maybe I won’t be able to make it to 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 you should focus on your dream of freedom, do some of these exercises to figure out what that is, and then you will find that the financial side of it goes much more smoothly, because it doesn't seem like such a daunting task.

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

GK: Everyone I meet does that. It's a phenomenon that's prevalent in all cultures. People get lost in the minutiae of everyday life, they have no structure. And without really dreaming of freedom, it becomes difficult for them to get things done (financially).

GI: The three questions help highlight what is most important to people and what they want to do with their lives – it gets them thinking about how they can use their money to achieve these goals?

GK: Exactly. It puts your eye on the goal. People don’t really know what they’re aiming for. I think they end up aiming for things they read in financial magazines or the Wall Street Journal or personal finance blogs. They think they should fix their IRAs and do more budgeting. They get lost in that instead of always focusing on, “Okay, this has a reason, and the reason is because I want to live this kind of life, and if I do these things[then]I can get there, and I can get there in a relatively short time.”

GI: But that doesn't necessarily mean that the way people save their money is wrong, right? I've heard these basic rules, like you should save at least 15% of your income for retirement. You're just saying you have to ask yourself why you're doing it?

GK: It's not a mistake. And besides, if you read good advice columns, or if you read books or you have an advisor, you'll have a good idea of ​​how to save, how to invest, and all that. So it's not a mistake. But the focus is not there, so you're lost.

You said, “Save 15% of your income for retirement.” But why use the “retirement” framework? I would argue that the more effective and relevant term for every human being is “freedom.” Freedom can come in a year, or it can come in six years. It doesn’t necessarily have to coincide with what we typically think of as retirement.

GI: Basically, don't necessarily put off your goals and ambitions until you reach retirement age.

GK: Exactly. When we look at these things, we think about how we can achieve this very soon. And by “very soon” I usually mean sometimes within months, often within three years, and usually within a year and a half or so.

This may mean that you don't get exactly what you want, but you are actually on the right path to it, and you feel a great deal of freedom as a result.

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

GI: Do you think this is something that anyone can do, or do you think it's just a luxury that's better suited for people who have the means? Maybe they're able to achieve this financial freedom more easily.

GK: When we look at it in terms of financial freedom, of course, people who have more means are more able to do it.

But I grew up in a very poor part of the country. I was born in West Virginia and I lived across the border in rural Ohio. And I think what you realize when you grow up with people who aren't wealthy is that you realize that every single one of them has a dream of freedom. Every single one of them wants to live a life that is not ordinary for them.

So, I would say that this is definitely available to everyone. And the main reason is that when you reach the dream of freedom, if you succeed in achieving it, you feel tremendous energy. You feel energetic and alive when you achieve that dream. And that's why it's not about the money as much as it's about building the passion for what you really want to be.

Q: How does your new book contribute to your life planning work?

GK: The focus of the book is to provide inspiration and advice on how to create your own life plan, so you can live it. The second subtitle of The Three Spheres of Freedom is Your Life Is Yours. This part of the book is to inspire the consumer to do it themselves, and if they can’t do it themselves, to find a curator who brings these things together to help them do it.

There are two other elements. They may seem off topic, but they are not really.

We only experience freedom in the present moment. It’s the only moment we ever experience. I devote a third of the book to mastering the present moment itself, and mindfulness plays a big role in that. In terms of personal finance, it’s useful because the more you’re not twisted and torn in the present moment, the less you’re suffering or neurotic in some way, the more peaceful you are and the more in control your decisions are.

Then the last third of the book takes the concept of “trustee” and applies it. What if every institution, every company, every nonprofit, every government, with the ability to hire financial advisors who are trustees of truth, democracy, the planet, and humanity, were trustees of truth? What I’m saying is, let’s ask them to be trustees, before their own self-interest. And if we did that, I think it would solve the madness we’re living in.