As true as it is that the best form of financial planning you can do is that which stems from something like creating a budget once you have a good idea of what you spend your money on and how you spend it, the ultimate in financial planning is that which takes into account the bigger picture. Yes, this so-called bigger-picture can take a bit of a while to form properly, but it’s only a matter of time over which a real effort to uncover it should be made.
Of course I am talking about the family finances by way of your planning, but I guess this can also be applied in the business world, for those who have chosen that route and are perhaps operating as entrepreneurs or self-employed individuals.
What is bigger-picture financial planning?
As the phrase suggests, bigger-picture financial planning is an approach to your financial planning which takes into account the overall, bigger-picture as opposed to focussing on specific areas of your finances in isolation. It might come across as a bit obvious, but when you actually look at the typical manner in which the average person handles their finances it becomes apparent that the focus of one’s attention can be lost to unnecessary pursuits.
I mean if for instance your life pattern follows that of someone who just about lives paycheque to paycheque, it can be difficult to look beyond the here and now of the bills you have to pay and the expenses you have to manage, so that you can see the bigger picture. For example, why is it that over a specific period of time like perhaps the festive season, your budget seems to take a bit of strain as a result of the obligation you feel to have to spend more on things like gifts, holidays and other indulgences? It’s because you’re not looking out far enough into the future…
The key to mastering bigger-picture financial planning is to start right now, right where you are. Sure, as is the case with the life of a typical working-class individual, your personal and family financial situation probably coincides quite closely with the market conditions, so there will inevitably be peaks and troughs as far as the situation goes.
You cannot spend your whole life navigating those peaks and troughs and barely making it to remain financially intact. Rather, what you should aim to do is make gains with the passage of time, regardless of which phase of the market conditions you’ve just come through.
It starts with implementing the bigger-picture approach in your everyday spending decisions, and to go back to the example of your obligation to purchase gifts, how about something like resolving to stick to birthday gifts under $50, regardless of who you’re buying the gift for? Of course this figure you settle on depends on just what you can really afford to spend, taking into account the bigger picture, for example, if you have 10 people for whom you must buy birthday gifts annually, then you know from the get-go that you’ll need to stick to gifts under $50 per person if you’re to stick to your annual $500 gifting treasury.