When Should You Take a Holistic Approach to Financial Planning?

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Holistic financial planning is just one way to approach your finances with specific, personal goals in mind. If you're not sure whether this approach might be right for you, it can be helpful to examine some scenarios where holistic planning may be useful. Let's look at four instances where taking a holistic approach might benefit your finances.

Moving Toward a More Permanent Situation

Looking at financial planning holistically often works best when there is a broad goal that requires you to reach some fairly specific benchmarks. For example, you might be looking to move into a house that can support a couple and two kids. You can look at the cost of homes in your area and the expected expenses of raising a child. Working from these numbers, you can then ask what will be necessary to establish a more permanent financial situation.

New Circumstances

Few things are truly permanent in like, though. As you move from one set of circumstances to another, holistic planning can help you to adapt. You might be looking at retirement 5–10 years down the road, for example.

It's best to start planning for that early for several reasons. You'll likely want to avoid realizing a major tax event, especially if you expect your income to decline upon your retirement. This means figuring out the best way to draw money from retirement accounts without moving into a higher tax bracket. Also, you'll want to be sure that your money can last through retirement. That includes planning for scenarios where you might live longer than you'd anticipate. Similarly, you'll want to think about how different benefits come into play. Drawing on Social Security and taking advantage of Medicare, for example, will work better with a holistic planning approach.

Giving to Charity

Many people want to make donations that will improve the world. Charitable giving, though, tends to require money. Fortunately, there are often tax benefits to giving to charity, too. This means you'll want to strike a balance between getting those benefits and donating as much as you desire.

Financial Opportunities

If you have the chance to invest in a property, found a business, or participate in a startup, that's exciting. However, you also need to those opportunities into your holistic financial planning perspective. A professional can help you to assess those opportunities and decide whether they fit well with your bigger plans. You can then proceed with greater confidence that you're ready to seize such opportunities.