The Power Of Perspective In Financial Planning

“When in doubt, zoom out.” A lot of things that I’ll never remember cross my purview on Twitter, but this one from Sahil Bloom stuck. The rhyming helps, but it’s not just a clever line. It’s applicable in life and especially when dealing with money, where finding and maintaining perspective is vitally important.

This is because there are so many details in financial planning that draw us in and slow us down. Especially until you’ve mastered the basics—which are most of financial planning—you needn’t worry about the details.

For example:

– If you haven’t completed primary and secondary beneficiaries for every account or policy that has them, and you haven’t set up a basic will, durable power of attorney, and advance directives (or living will), you don’t need to worry about any trusts or fancy estate planning. And by the way, if you haven’t done everything in this first bullet point, please set this article aside and don’t come back to it (or anything else), until you’ve done that. Basic estate planning is the most important component of financial planning.

– Speaking of fancy, you don’t need any kind of bells-and-whistles life insurance policies (whole life, universal life, or variable life) until all of your life insurance needs are met with term life insurance, you have adequate cash savings, you have no revolving debt, you’re maxing out your (and your spouse’s, if applicable) 401(k) and Roth IRA contributions every year, and college is paid for.

– You don’t need to worry about individual stocks, commodities, options or other derivatives, or crypto until you have a purposeful portfolio that is simple enough that you could explain your strategy to a fifth grader. That’s Plan A—the rest is at best Plan B.

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

The “biggest benefit of finding perspective is that it simplifies/minimizes decision making,” said Meg Bartelt, while the “downfall of getting stuck in the details is squandering time and emotional energy, and therefore not having it for the activities and people you value.”

Wow—that last one hit me pretty hard. Is whatever financial strategy you’re working on really worth the expenditure of emotional energy that you could otherwise be spending on the activities and people you value?

“Decision making is draining and we need good filters and heuristics, or guiding principles at least,” said Jude Boudreaux in agreement with Meg. “I think of it having a bigger Yes so it’s easier to say lots of other No’s.”

Reese Harper offers a path in perspective, starting at the highest levels and working your way toward the details. “Define your statement of financial purpose first. Then prioritize your values. Then set goals. Then take actions.” The benefit, he says, is complete personal alignment with money.

Complete personal alignment with money sounds pretty compelling, right?

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

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