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I hear you thinking after reading the title: ‘But I’m already thinking more & more about money, especially now after the Pandemic, what else can I do more’. Great point, then please read below…

Focusing on the trees and missing the forest

As a financial planner and investment advisor, I get to talk and have conversations about money with many different people, but something is a common trend that goes through most conversations. Most often it is one or two issues that people want to meet with me about; something that either bothers them (like debt), or something that they want to achieve sooner rather than later (how to buy a home now). It is a focus on these few items (not necessarily my above examples) as well as a focus on the ‘now or soon’. While it’s OK, and I’d rather meet with people that have a couple of questions than not meet at all, what I’m saying is that a full-financial-plan is what most should be aiming for and not a ‘fix this current issue for me now’ approach that most take. It is really focusing on the tree(s) and missing the whole forest.

What’s Financial Planning?

So, what can one do and how should they go about it? Focusing on financial planning means taking a look at all aspects of your life that in some shape or form connects to money. There are many life aspects that connect to money and you may not readily be thinking of all of them, or even have a need for all of them, depending on where you are in your life. But knowing them, addressing them, and making a plan for them (even if it is to look at them later) makes a lot more sense and should be pursued rather than one item at a time. It’s like going to a doctor that has never met you before, but you know and expect that they’ll ask you to fill out a long & time-consuming questionnaire to understand who you are, what your history is, and if any, family health history. It’s exactly the same with money. A financial planner can answer any immediate questions you may have, but without understanding the other parts of your financial life, the answer they give will be incomplete at best, or bad/hurtful in the worst-case scenario.

Align your values with your goals and eventually with your money

What comprehensive financial planning does is give you clarity about where you are and where you want to go. With the help of an advisor you can identify your values and goals and then start thinking about and prioritizing those goals from most important to least important. In addition, financial planning matches your values with your hard-earned money, potentially if done right and invested properly, it allows for a comfortable retirement, achieving goals on time, and more time for things that really matter to you, instead of continuously asking yourself or even your advisor ‘What stock to buy now, or what should I do now?’ A good financial plan has to take into consideration the good and the bad that may happen out there, and should focus on the things that we can control, like the savings rate, your goals and their achievement, your diversification and low cost investing. What shouldn't be the focus are items outside our control, like stock market daily fluctuations. A good financial plan doesn’t leave items to chance and eventually, it should also give peace of mind that you have a plan for almost anything that could happen. You can’t control the outside forces, but you can control your reactions, and if you have a plan that has considered outside forces and embedded them in the plan, the stress of an outside panic should be much more reduced. We had many clients with good financial plans that we advised during the pandemic and mainly continued with the plan in action without changes because the plan had already incorporated potential market drops in it and no changes were needed. The clients were much more calm understanding that even the pandemic couldn’t severely affect their plans.

How to start?

As mentioned earlier we start by identifying our values, what we stand for and what kind of life we’d like to have. Some values don’t require money, you know like ‘being a good person, respectful, having integrity and alike’, but some values do need money. Do you value living in a nice neighborhood, value the benefits of a decent education for your kids, value a healthy and stress-less retirement, and value being able to make lasting memories traveling? – those are some of the values and goals that do need money. There are more goals too, some may apply to all, and some may be specific to the individual, but here are some more to get you thinking: 1.)An Emergency Fund (to cover worst-case scenarios like when a pandemic hits and you lose your job for many months to not-so-bad cases for when you have a minor unexpected expense),2.) a retirement fund (how much is enough, where and how much to contribute),3.) a getting out-of-debt plan (how and what to pay first), 4.)a Kids’ education plan (where to invest, what are my options), 5.)a buying a home goal (what do I need, how much down payment, what else), and any other custom goals that you may have.

Prioritize your goals (unless you’re a trust fund baby)

After writing down all of your goals, their time horizon you want to achieve them by, and the potential amount of money that is needed, then we go into prioritization. It would be great to afford all goals at once, and while some may have the fortune to do so, but for most of us, we need to point out what’s most important and how to target those goals first, starting from the ‘must-have’, to ‘good-to-have’ to the ‘big-wish’. Together with the client we look at the personal financial statements and their cash flow (income & expenses) to see what and how to achieve those goals, while also providing a reality check (if you’d want to buy that motor-bike before funding your retirement J)

A financial plan covers wide & deep

This 'big-picture' look at your money is typically NOT the way most people think about money, but it is the only way to look at your financial situation. You cannot ‘fix’ one item of your finances without changing or maybe even creating consequences in another part of your financial life. Thinking comprehensively is not an option, and in my opinion, is the only way to approach one's finances. Many people don’t know what financial planners do, and many think that investing is mainly it, but a lot more work is put on the other parts. In addition to setting up achievable goals and creating a plan to get them fulfilled, financial planning checks specifically at your tax situation, trying to minimize unnecessary taxes, looks at your retirement accounts (at work and off work), your debt management, your personal balance sheet and its tracking, different investment strategies and how to diversify at low cost. It also looks at the different insurances that you may need, from life to disability to auto and home. It makes a plan for your kids’ (if any) education, and what 529 plan to use and where/how to invest there. Lastly, it also focuses on the estate planning items that everyone needs, like their basic will, living wills and Power Of Attorneys, to cover all your angles when tragedy hits.

Many focus on the trees while missing the forest, but if you pull back a little and focus on the ‘whole’ instead of just a couple of slices of your life, you’ll be more fulfilled, more prepared, have perspective and be ready for when that particular slice of life comes your way. Once prepared for it, you won’t be surprised, and that peace of mind is the ultimate gift of planning comprehensively. Now, I’ll let you be, as I go and eat a whole pizza all by myself – you know, focusing on the whole, not on the slice. Cheers.


Lead Advisor, InvestEd.

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