Many individuals confuse financial planning with investing. That’s understandable. Some people invest without thinking about what that money will be used for. Some people dream of certain things, but don’t know how much they need to save to make it happen, or how long it will take. That’s where financial planning comes in.
What are your goals and how can we reach them? With holistic financial planning, the focus is on the whole you: your goals, your values, your comfort with money.
Many financial advisors have a product-driven approach and their goal is to sell you a product such as life insurance, a mutual fund, or an annuity. Financial planning is different. Financial Planning is a holistic approach to help you achieve your goals and dreams by wisely managing all of your resources, including your finances, while at the same time negotiating life’s challenges.
With comprehensive financial planning, we look at all the components of your financial life including cash flow analysis, risk management, retirement planning, investment management, tax management and estate planning. Adding a holistic approach to financial planning can also mean ensuring that your financial life aligns with your personal values. For example, investing in socially responsible or environmentally responsible investments. With this type of ethical investing, there are many approaches to take from a socially responsible focus to an environmental lens or through impact investing which seeks not only good returns but also measurable social benefits.
For many people, retirement dreams don’t become really clear until they’re near retirement. That’s perfectly normal. But if we wait until we have the dream to start saving for them, we often find that those dreams require a lot of saving or may even be unattainable. If your retirement dreams are still unclear, or you really don’t know what the future holds, having a plan will help you be prepared for what life throws your way. When times are good, you’ll know that you’re on your path and when you hit one of life’s speed bumps, you’ll know that there’s a plan to help you stay on track. That way, when that retirement vision crystallizes, you can react to it with confidence.
While how to save (and how much!), and where and when to invest those savings, is every bit important, prudent Financial Planning goes much beyond the realm of just saving and investing. The sooner you understand the role of financial planning in meeting your short, medium and long-term financial aspirations, the better you’ll be able to control your financial destiny.
In short, a good financial plan should be about YOU, personalized and customized. A cookie-cutter approach just will not do.