Over the last few years, economic uncertainty has dominated the thoughts and concerns of families across the nation. In response, Americans have been forced to make a wide array of adjustments, both small and large, to their financial priorities and choices. These findings were confirmed in a recent study by Northwestern Mutual exploring Americans’ outlook on the current state of the economy and how economic uncertainty has influenced their financial choices, with 64% of respondents reporting cutting costs and 41% admitting to postponing significant expenses until the economy regains its stability.
As a financial planner, my goal is to empower individuals to navigate economic turbulence without uprooting their lives by reimagining wealth during economic uncertainty. This concept encompasses a dynamic value-based approach to financial planning that incorporates mindfulness into financial decision-making, helping build financial confidence and contentment as a result.
The Importance of Value-Based Financial Planning
In an era where market fluctuations are a regular occurrence, having a financial plan in place that not only safeguards your financial future but also nurtures your overall well-being is crucial. According to the same study by Northwestern Mutual, 36% of Americans say uncertainty about their finances keep them up at night at least monthly. However, the study indicates that those who work with a financial advisor and who identify as a disciplined planner are more likely to feel confident in other areas of their personal and professional life.
Value-based financial planning involves working with a value-based financial planner to align your financial goals with your core values. Beyond just accumulating wealth, I see this approach as achieving a balance between your present needs, future aspirations and the legacy you wish to leave behind. A value-based financial planner can work with you to make thoughtful decisions that both honor your priorities and help you work toward your goals, while anticipating market fluctuations. You can expect a value-based financial planner to ask questions that extend beyond your current financial situation, including:
• What are your earliest memories with money?
• What core values and beliefs are important to you?
• Do you have any charitable or philanthropic goals?
• What kind of legacy do you want to leave for your family?
• If money wasn’t a factor, how would you choose to spend your time and who would you spend it with?
• How do you think your lifestyle will change as you enter this new life phase (i.e. having children, becoming an empty nester, being retired)?
Mindfulness in Financial Planning
Mindfulness complements a value-based approach to financial planning. It encourages you to stay present, emotionally balanced and focused on your financial objectives. There are small things you can do regularly to create mindfulness in financial planning.
• Regular budget check-in: Carving out dedicated time to review your spending can help you stay present with your current financial state and drive accountability with your long-term financial planning. Implementing regular check-ins can also eliminate some of the fear associated with checking your spending and can also lead to more thoughtful purchasing.
• Gratitude journaling: Expressing gratitude is a great way to increase purpose-driven spending. While journaling is not going to be the solution to all your financial worries, it’s a great step to increase mindfulness and improve your mental well-being. Gratitude journaling can also help you recognize which activities or purchases bring you joy to ensure your cash flow aligns with your values.
• Taking a purchase pause: Oftentimes, consumer purchases are driven by emotions rather than by intentionality. By taking a few moments to consider if this purchase fits into your financial plan, you can potentially avoid impulse spending.
• Viewing your plan with foresight: Having annual financial reviews to see how your current financial habits and strategies are impacting your long-term goals and dreams can help reduce the stress of the short-term uncertainty that we see in the market and economy.
Although experts can try to predict the fluctuations of the economy, it’s impossible to know with full certainty what the economy will look like in the future. This uncertainty underscores the importance of implementing this redefined approach to wealth management — the synergy between value-based financial planning and mindfulness offers a powerful shield against economic volatility. In these unpredictable times, this holistic approach to financial planning is not just beneficial, it’s essential for your financial well-being and peace of mind.
For more information, please visit beckygustafson.nm.com.
Rebecca M. Gustafson, CFP, MSFP, AEP, ChFC, CLU, CAP, RICP, CASL, LUTCF, CLTC is an estate and business planning specialist with Northwestern Mutual. She can be reached at (985) 290-6745.
