A holistic financial plan is a comprehensive approach to managing one’s finances that takes into account all aspects of an individual’s financial situation. The goal of a holistic financial plan is to help you achieve your financial goals and objectives by creating a customized plan that addresses your needs and concerns. It includes creating an investment strategy that aligns with their risk tolerance and time horizon. A financial advisor or planner can help an individual create and implement a holistic financial plan.
A holistic financial plan is important because of following reasons:
- Helps you make informed decisions about spending, saving, and investing.
- Helps identify and prioritize financial goals, such as saving for a down payment on a house, funding a child’s education, or preparing for retirement.
- Helps create a budget to manage income and expenses and ensure that bills are paid on time.
- Helps create an emergency fund to cover unexpected expenses and protect against financial setbacks.
- Assists in making informed decisions about investing, such as determining an appropriate asset allocation strategy and selecting specific investments.
- Helps to minimize taxes and maximize returns by taking advantage of tax-saving opportunities.
- Helps to ensure that you have enough insurance coverage to protect yourself, your family and your assets.
Overall, a financial plan can help increase financial security and reduce stress by providing a clear and actionable plan for managing money.
Before you venture into investing, there are 3 important things to keep in mind.
1) Emergency Fund
An emergency fund is a savings account set aside for unexpected expenses or financial emergencies. It is typically recommended that you save money in an emergency fund to cover three to six months’ worth of living expenses.
Having an emergency fund can be beneficial because it:
- Provides a safety net in case of unexpected expenses or financial emergencies.
- Helps to avoid going into debt to cover unexpected expenses.
- Can help to reduce financial stress and increase peace of mind.
- Can help to avoid having to sell investments at a loss in a market downturn.
It’s recommended that an emergency fund should be kept in a liquid account such as money market account or short-term deposit account.
2) Insurance
Insurance is important because it helps protect individuals and families from financial loss in the event of unexpected events such as accidents, illnesses, or the death of a breadwinner. It acts as a safety net that helps to mitigate the financial impact of such events and can provide peace of mind by knowing that you and your loved ones are protected.
Some specific reasons why insurance is important include:
- Health insurance: It helps to protect individuals and families from the high cost of medical care and can help to ensure that they have access to necessary medical treatments and procedures.
- Life insurance: It helps to provide financial support to loved ones in the event of the death of a breadwinner and can help to ensure that they are able to maintain their standard of living.
It’s important to have the right insurance coverage to help protect yourself and your assets. A financial advisor or insurance agent can help you determine how much insurance you need and what types of insurance policies would be the best fit for you.
3) Low Debt Levels
To maintain low debt levels, it’s important to be mindful of the amount of debt taken on, and to make sure that spending and borrowing are kept in check. This may involve creating and sticking to a budget, avoiding unnecessary purchases, and paying off debt as quickly as possible.
It’s important to note that having no debt at all is not always the best way, sometimes having a moderate level of debt can be healthy. It’s important to have the right balance and to have a plan to pay off the debt.
Feel free to schedule a call with us here Consult Us – Mutual Fund Advisor and other Investment Advisory – My Invest Buddy, we will help you create an investment plan best suited for your goals and investment objectives.