Hi guys, Welcome back to our site The Comprehensive Minds. And in today’s article, we’re going to be discussing five steps to creating a financial wellness plan. What’s a financial wellness plan? Well, I’m glad you think about it, and I certainly will be getting more into that as we go through the article. But I really just wanted to talk to you about why this is such a hot topic right now.
What is Financial Wellness Plan
You know, currently, more and more people are really, really interested in taking a good look at their financial situation. And it’s not just people who are nearing retirement or people who have a lot of money to invest that are looking at developing their financial plan or understanding their finances. It actually probably has to do a lot with our current financial and economic environment that we’re living in.
Post-pandemic number one, we’ve got prices rising like crazy, record high inflationary rates, and then we’ve got the stock market decline. Right. And so people are fearful that we’re going into a recession.
And then there’s this phenomenon that they’ve called the great resignation, which has to do with hundreds of thousands of people literally walking away from their jobs and careers that they’ve had for decades in order to pursue their passion, in order to do something that they enjoy or they just feel like, you know, this current job is not serving me well.
It’s not good for my mental health and well-being. So I’m going to go out and I’m going to start my own business, or I’m going to learn how to invest in real estate and the stock market, you know, post-pandemic Google search. The number one thing people looked up on Google right after COVID hit and we had the shutdown was how to invest in the stock market.
And so we’re finding because of the nature of our business here and interest and business advisors, as well as our Infinity Investing affiliate, that more and more people are really interested in taking control of their entire financial situation. And so when you’re talking about traditional financial planning, that looks very different.
It’s going to be very focused on a certain date that you hit for retirement and building up to a certain pot of money and then living off that pot of money. Until, you know, you die and hope that you don’t run out of money before you kick the bucket. Because then you’ve got to worry about, having a deficit.
Areas of planning
So the six areas of financial planning that typically would be focused on would be investments, retirement planning, taxes, estate planning, insurance, and education planning if that’s applicable. So those are the areas and what a traditional financial planner is going to do. They’re going to look at all of those areas of your financial life, determine your financial picture, and see, how that fits in line with your retirement goals and objectives.
And then develop a plan to help you get there if there are any gaps. Well, again, with the current state of affairs, what we’re noticing is more and more of our clients. As I said, it’s not just about having a pot of money to retire on. They’re more interested in having a good quality of life and a good overall financial situation.
And there’s actually been a survey that was done in July of 2021 and about 500 clients were surveyed. And they basically said that their top three reasons for seeking out a person or financial professional to do their financial planning were three reasons growing wealth, protecting wealth, and achieving peace of mind.
Now achieving peace of mind was not on the typical, financial planners’ radar when they’re talking about retirement planning. But we’re in a different environment now. We’re at a different age. And that is what’s caused us to kind of coined the phrase financial wellness.
Because more, more and more, it’s all about having a healthy relationship with money and how money or how you get your money impacts all the other areas of your life. The same group of clients that were surveyed, also, determined that they’re putting a much greater emphasis on things like feelings, security, peace of mind, financial independence, and making sure their needs are met than they are on specific investment or retirement goals.
That used to be very much data-driven. I want to retire by this age and I need to have this amount of money. More and more that’s changing. And people are more interested in having a better overall financial well-being. It’s just like your physical health, for example. Let’s just say you’re going to take an annual physical and you’re visiting your physician.
You’re going to do a comprehensive overview with your physician about your physical being, right? You’re going to answer a ton of questions about your history and your family’s history. You are probably going to have to take several tests, though, monitor your take your blood test pressure. They’ll take your temperature, they’ll run blood tests.
And then you’re going to have, a series of questions or exercises that you may have to do with the doctor in order for him to give you a thorough analysis and a thorough overview. Right. And then they’re going to have qualitative data, such as, what’s going on with you, how are you feeling? What are you experiencing, and all of that family history?
And then they’re going to have quantitative data. And they’re going to have your test results from your blood work, your blood pressure. You know, some people might even have to go through, other types of monitoring, for cardiovascular health and all of those things. But the bottom line is that you’re going to be looking at your overall physical health and well-being.
Well, creating a financial wellness plan is very similar. We’re going to be looking at qualitative and quantitative data combined together to do an overall analysis of your current financial situation and develop a plan for you to achieve your goals and objectives. So what are those five steps to creating a financial wellness plan?
1. Establish your why
While step number one is establishing your why. Why is critical to a financial wellness plan? Because you know what? You can tell me that, you want to make, you know, $1,000,000, $100,000 or $1,000,000,000. It doesn’t matter if I don’t understand the why that’s driving you to understand why you have these goals and objectives.
It’s going to be very, very difficult for me to help you to do the things you need to do to get there. Right. So establishing a Y is really critical, a really critical step in discussing your overall goals and objectives and what you want to achieve with the plan.
2. Look at the data
Step number two then is we’re going to look at the data, and develop a clear picture of your financial situation. So, you know, a good financial professional, if you were sitting down with one of the analysts, they’re going to do a financial fact client. Are you going to have to complete that? And it’s going to basically go over all of your income, your expenses, your assets, and your liabilities, also looking at any of your investment accounts or insurance policies and developing a really clear picture of your current financial situation.
Now, once they’ve reviewed that and evaluated it and analyzed everything that you have on, they’re also going to look at your tax exposure and, look also at your estate planning and those types of things as well.
3. Choosing specific services
Step three Choosing specific products and services that are going to help you specifically meet those financial objectives. The good thing is, if you work with a fiduciary, which is someone who’s going to have their client’s needs and best interests at heart, you will not be being sold like when you’re working with certain professionals who, get commissioned based on, utilizing their specific, products and services, right?
You know, invest in this particular mutual fund that has the same name as my company’s name. Right? So you want to be careful about that, but you’re going to be looking at whether are there specific products and services that I need to have to help me achieve those financial objectives.
Maybe you are deciding that you want to, you know, learn to be an investor in real estate and you want to take some have some real estate education, and you’re going to invest in that. Perhaps you’re starting your own business and you want to make sure that you set it up properly. So you need to, open a scoreboard LLC.
And so those are going to be the types of things, perhaps as a business owner, you want to have a solo 41k where you can be in charge and take control of how your retirement funds get invested. Those are the types of things that you need to be looking at when you’re choosing products and services that meet your needs.
Another big one is college planning. What’s the right vehicle? Is it a 529 C? Is it some other type of investment vehicle? Is it an ideal indexed universal life policy? There are ways that you can grow money there that have some benefits over the 529 CE those types of things you want to really be looking at when you’re talking about what products and services or things do I need to put into place to make sure I achieve my financial goals?
4. Implement Strategies
Then step number four, once you’ve determined that is to actually implement those strategies. So take what you discovered in step three and actually put them into place. Go ahead and address all of the things that are gaps in your financial plan or weaknesses and make sure that you address them.
So if you don’t have enough money in your emergency fund, make sure you tackle that first. You have too much debt. Pay down that debt. And, you know, or if it’s something, you need to create an entity or invest in some training, go ahead and implement the steps that you need to take so that you can execute on your strategy.
5. Monitor your plan
And then last but certainly not least, is to monitor your plan. So monitor your plan at least once a year and make critical adjustments along the way. I mentioned post-COVID and postpartum dynamics. Things have changed and circumstances change. Your goals may change, and your financial situation may change.
And so looking at, a financial plan, once it’s just set aside, is not very helpful. It needs to be a living, breathing document. That’s going to be something that you refer back to or monitor along the way.
So those are the five steps that are going to be critical for you to create a financial wellness plan. And again, remember, failure to plan is planning to fail.