Taking a holistic approach to money is really all about goal-setting. 

Rather than the traditional approach to financial planning of looking from the bottom-up–think looking at what you can spend now, using numbers like your age and income to determine how much you should save/spend now–holistic financial planning is more of a top-down approach. 

Top-down means that you should be looking at your financial goals and where you want to be in the next 20 years vs. just what you can manage right now. 

For more insight on goal-setting tactics, check out this blog here.

So, where should you start when it comes to building your financial plan?

 

Holistic financial plan

At its core, financial planning is there to help people better understand their current financial standing. Financial planning also serves to help people understand wealth and building wealth (primarily through investing and saving). However, financial planning is much more than that.

Despite what many think, financial planning is more than investments and savings. It takes into consideration every area of our financial lives ( taxes, estate, insurance and risk, etc) to make sure everything is working together like a well-oiled machine so you can reach your goals and live the life you want to live.

A holistic financial plan usually looks at:

  • Investment strategy, including investments made through taxable brokerage accounts
  • Retirement planning through a 401(k), Individual Retirement Account or tax-advantaged account
  • Social Security and Medicare benefits planning
  • Discussions around annuities to create a reliable income
  • Long-term care planning, including the use of long-term care insurance
  • End-of-life planning, including the need for advance healthcare directives or power of attorney
  • College planning
  • Insurance planning, including life insurance and disability insurance
  • Estate planning
  • Tax preparation and planning
  • Budgeting
  • Saving for short- and long-term financial goals and needs
  • Business and succession planning
  • Charitable giving
  • Major life changes, such as a divorce, job loss or birth of a child

Yours may not necessarily cover every item on this list. It really depends on where you’re at, what your goals are and what makes sense for you and your family.

 

So, why a top-down approach?

Using your goals to identify what makes sense for you helps to put you in a better position to actually reach those goals.

Think of it kind of like these two strategies you could take when trying to eat healthier or lose weight.

  1. Would you want to cut out all carbs right now and only eat kale?
  2. Or, would you want to look at your lifestyle and identify where you could cut down on carbs while adding in additional greens to find a balance? 

They both can work, but one tends to be a little more manageable and maintainable long term… 

Many times, getting help from an outside financial advisor makes this process easier.

  • Easily adjustable – financial advisors will look at every angle of your financial situation to determine what’s working and what’s not so together you can make adjustments accordingly.
  • Tailored investment strategies – regardless of the type of investments you have, a financial advisor can help you strategize and outline the best types for you and your lifestyle.
  • Builds confidence – advisors understand where you’re at now and where you want to be so your plan is tailored to you. You can walk away feeling confident this is something you can actually accomplish.
  • Develop a trusted relationship – you never have to go about your financial journey alone. You always have a trusted advisor to help you along the way.