Managing money isn’t just about budgeting or picking suitable investments—it’s about looking at the bigger picture. Many concentrate on one area of their finances without considering how all the pieces fit together. Holistic financial planning is an approach that goes beyond standard financial advice. It takes into account every aspect of your financial life.
Holistic financial planning is about creating a comprehensive plan that addresses all areas of your wealth. Hence, every decision supports your overall financial goals. Financial advisors who use this approach help you to better manage financial risks and make informed choices. They build a financial strategy around your life’s objectives and aspirations.
What Is Holistic Financial Planning?
Holistic financial planning is an approach that looks at your entire financial situation rather than narrowly concentrating on individual parts in isolation. Instead of just managing investments or creating a retirement plan, it integrates all aspects of your financial life.
This includes:
- budgeting
- saving
- investing
- tax planning
- risk management
- debt management
- education planning
- insurance
- estate planning
Traditional vs. Holistic Approach to Financial Planning
Traditionally, people seek financial advice for specific products or services, like creating a will, planning taxes, donating to charity, or planning for retirement. Here, each decision is made separately. Your estate planner, accountant, mortgage broker, and investment manager often work independently.
A holistic financial planner would look at how every part of your finances impacts others. A boost in your income might affect your tax strategy, investment plan, and insurance needs. If you’re an empty nester and want to downsize, this will affect your financial plan.
This interconnected approach connects all the dots to make sure your financial decisions support your broader goals. Choose a financial planner that is willing to work for your life goals.
Holistic financial planning and wealth management addresses your short and long-term goals on how to grow wealth, protect assets, plan, and align money with personal values. You can anticipate changes and adapt your plan as needed.
Identifying Gaps with a Holistic Approach to Financial Planning
Your life isn’t fragmented into several tiny pieces, so it only makes sense that a holistic approach to financial planning integrates everything:
- income
- expenses
- debt
- taxes
- insurance
- investments
Let’s say you want to buy a home. Making that purchase isn’t just about securing a mortgage. You need to consider how that purchase impacts your cash flow, tax situation, insurance needs, and long-term financial goals. This approach to financial planning helps you identify gaps or overlaps that might otherwise go unnoticed.
Consider your retirement plans. Instead of just saving in a retirement account, a holistic plan considers the tax implications of your withdrawals. A combination of Roth IRAs, traditional IRAs, and taxable accounts allows for more tax-efficient income during retirement. Your strategy must also factor in your current tax bracket and how future withdrawals will affect your overall tax situation.
What about holistic financial planning and wealth management? You certainly want to do more with your money than keep it; you want to grow it. A holistic approach to financial planning doesn’t just focus on picking investments that offer high returns. It also considers your risk tolerance, insurance needs, and your potential heirs in your estate plan.
Debt piles up, and paying it off is important, but a holistic plan would also look at how aggressively paying down debt affects your ability to save and invest. If you’re focused only on paying off your mortgage early, you might be missing opportunities to invest in a retirement account that grows tax-free. A balanced approach can help you manage debt while still meeting savings goals.
Big life changes like having a baby, buying a second home, or downsizing in retirement aren’t only about the immediate costs. A holistic approach considers how these big lifestyle changes impact your overall cash flow, insurance, and future goals. In addition, life comes with unexpected surprises (good and bad) like:
- divorce
- job joss
- inheritances
- death
- illnesses
- children/grandchildren
It’s about adjusting your entire financial plan to accommodate these major life events. Also, markets can change, and laws will continue to evolve. Regular reviews of your financial plan make sense. You may need to reallocate investments or update your estate plan to keep everything relevant.
6 Benefits of Holistic Financial Planning
The benefits of holistic financial planning go beyond basic money management. Key advantages include:
- You get a comprehensive overview of your finances. It examines all aspects of your wealth—investments, taxes, insurance, long-term healthcare, Social Security benefits, and estate planning. You get a full view of your financial health, revealing how each element interacts and influences the others.
- You get better risk management. A holistic approach to financial planning helps identify gaps in your current strategy, such as insufficient insurance coverage or lack of diversification in your investments. This can help protect you from an unexpected turn of events and market downturns.
- You are focused on achieving your life goals. Holistic planning ensures that financial decisions match your values and life objectives. Whether it's saving for retirement, buying a home, or funding education, each decision is made with your broader goals in mind.
- You are working with a tax-efficient strategy. One of the benefits of holistic financial planning is a coordinated tax strategy. By examining how taxes affect your income, investments, and estate, you can take steps to reduce your tax liability and increase your overall wealth.
- You have a flexible plan that adapts when you need it to. A holistic plan is not static; it adapts to changes in your life, like a new job, a growing family, or a change in health. This keeps your financial plan relevant and up-to-date.
- You have financial peace of mind for yourself, your family, and your beneficiaries. Financial peace of mind comes from knowing your finances are well-managed. It’s about confidence that your financial path aligns with your future goals, not just managing numbers.
Build a Foundation for Future Financial Success
You can’t secure a solid financial legacy without a strong foundation. Work with the experienced team at Asset Preservation Wealth and Tax to get a complete view of where you are and where you’re going financially.
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Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
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