The power of perspective in financial planning

“When in doubt, zoom out.” A lot of things that I’ll never remember cross my wits on Twitter, but this one by Sahil Bloom blocked. The rhyme helps, but it’s not just a smart line. This is applicable in life and especially when it comes to money, where finding and maintaining perspective is vitally important.

It’s because there are so many details in financial planning that pull us in and hold us back. Especially until you’ve mastered the basics, which is most financial planning, you don’t have to worry about the details.

For instance:

If you have not completed the primary and secondary beneficiaries for every account or policy that has one, and you haven’t established a Basic Will, Enduring Power of Attorney, and Advance Directives (or Living Will), you don’t have to worry about trusts or sophisticated estate planning. And by the way, if you haven’t done everything in this first point, please put this article aside and don’t come back to it (or anything else), until you have done that. Basic estate planning is the most important part of financial planning.

– Speaking of fantasy, you don’t need any fancy life insurance policy (whole life, universal life or variable life) until all of your life insurance needs are met by term life insurance, you have sufficient cash savings, you have no revolving debt, you put your (and your spouse’s, if applicable) 401(k) and Roth IRA contributions each year, and college is paid.

You don’t have to worry about individual stocks, commodities, options or other derivatives, or crypto until you have a focused portfolio simple enough that you can explain your strategy to a fifth grader. This is plan A – the rest is plan B at best.

These three elements are just a sample of the ways we often get drawn into the details of financial planning tactics and strategies. I also asked a handful of financial advisors and leading thinkers from across the country why they thought it was important to find perspective in financial planning and what are the biggest downsides of getting stuck in the details. Here is what they said:

The “biggest benefit of finding a prospect is that it simplifies/minimizes decision-making”, said Meg Barteltwhile “the downside of getting stuck in the details is wasting time and emotional energy, and therefore not having it for the activities and people you enjoy”.

Wow, that last one hit me pretty hard. Whatever financial strategy you’re working on, is it really worth the expenditure of emotional energy that you might otherwise devote to the activities and people you enjoy?

“Decision making is exhausting and we need good filters and heuristics, or at least guiding principles,” said Jude Boudreaux in agreement with Meg. “I think he has a bigger yes, so it’s easier to say a lot more no.”

Reese Harper offers a path in perspective, starting from the highest levels and progressing to the details. “Define your financial goal statement first. Next, prioritize your values. Then set goals. Then take action. The upside, he says, is complete personal alignment with money.

Full personal alignment with money sounds pretty compelling, doesn’t it?

And Stephanie Bogan suggests, “When your vision is clear, your decisions are easy. Not without effort or economy, of course, but easy in the sense that when you step back, you can see the way forward much better. She concludes that financial planning “is about helping people align their money with what matters.”

Indeed, it is by aligning your money with what matters that we arrive at the sweet spot of financial planning. In other words, all good financial planning is truly lifelong financial planning. Life planning is the perspective that strengthens our financial planning. So please, when in doubt, zoom out!

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