‘But they look so healthy?’
How often has that been your response when you hear of a friend receiving a shock health diagnosis?
The odds are, your health will change, sometimes unexpectedly. And if current research is anything to go by, protecting your health is more important than ever – especially as we are likely to live longer than before.
In line with this, financial advisors are now engaging with the connection between health and finance. It’s a holistic strategy to financial life planning that considers how an individual’s well-being affects their wealth. This approach not only reshapes how financial advisors work but also helps clients understand how their health impacts their financial situation.
In last month’s, Look, Listen & Learn, Elke Zeki touched on this issue, highlighting health as a critical pillar in financial planning. In this article, we will expand on how we integrate health into your holistic financial planning journey.
Integrating health in financial planning: two key questions
To bring health considerations into your financial planning, we pose two simple, but powerful questions:
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How might your health impact your finances?
Good advice will ensure that you and your family have the necessary plans to ease the risks based on your current health status.
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How might your finances impact your health?
Effective financial planning can free up both money and time – which means you can spend on things that were previously not available to you. Having the means and making the wise choice to spend on your health and well-being can significantly improve your future health status.
Continually adapting to changing health circumstances
A critical part of this process is recognising that Integrating health into your financial plan is a cyclical journey. It’s something that you need to revisit several times throughout your life, adapting it to any new circumstances. By routinely returning to the first question, ‘How might your health impact your finances?’ a good financial planner can create a financial plan and strategy that best suits a client's current and future circumstances.
Health and Financial Planning Strategies
At Foundation, we integrate health into your financial planning journey using various strategies:
Risk management
This ensures financial resilience when you are faced with current and potential health-related costs in the future. Adequate medical aid, disability coverage, income protection and life insurance are crucial components of this. Unforeseen events need to be considered and planned for. If not, the journey back to health might not be possible and may derail your financial well-being.
Budgeting and Cash Flow Management
Simple budgeting exercises can show you how much you can invest in your health. When you take stock of your expenses it creates awareness for more mindful spending and savings. By tracking your expenses, you can plan more effectively and prioritise. This, in turn, provides you with the means to afford preventive healthcare and early intervention, leading to long-term cost savings.
Building an emergency fund for unforeseen expenses - health-related and otherwise – is also something we prioritise. It’s often a good alternative to medical savings accounts within medical schemes. With this safety net, you'll be better prepared to handle unforeseen medical expenses without jeopardizing your financial stability.
Similarly, potential long-term care, critical illness or disability costs are integrated into our cash flow planning models - helping us identify any possible shortfalls and implement the necessary budgeting, savings strategy and insurance coverage to protect our clients.
These tools and strategies have a very real outcome for our clients. For instance, a couple recently spoke to us about their declining health and expressed sadness about what this meant for their dreams to travel the world during retirement. To help them, we performed a cash flow planning exercise. As a result, they are now able to tick off big bucket list trips while still enjoying them to the fullest. The best part is they have peace of mind, knowing they can afford to do this while accounting for future health-related expenses.
Whether it’s more years of good health or in other cases more years of frailty – life expectancy is factored into our cash flow models.
Legal Documents
Living Wills and Power of Attorney are particularly important. These documents protect your interests in case of severe health issues. They also help your family understand your wishes and avoid any potential conflicts should you fall ill.
Money beliefs
At Foundation we believe that the best financial decisions are made when you understand and acknowledge the relationship you have with money. This includes considering how your past may be impacting your current spending habits and emotions. Having constructive discussions informed by these insights helps reduce financial stress and empowers you to make better financial decisions. It’s important that you make your money work for you in a way that adds meaning and value to your life - whether that’s buying a gym membership, taking a sabbatical, implementing the appropriate insurance, or doing activities with friends.
Education
We recognise the importance of cognitive health and its impact on your overall well-being. Our workshops, communications, and discussions, aim to:
- Share interesting topics, books and podcasts
- Embrace opportunities for personal growth
- Explore interests that contribute to your overall wellbeing
Partnering for success
Integrating health into your financial planning empowers you to set health goals, maintain a healthy lifestyle on a budget, and invest in long-term health. A financial partner can be a valuable ally. At Foundation our motto is Wealth for Life. We are, together with you, accountable for both your financial well-being and health. By leveraging on our expertise, we help you secure a life that is your wealth ideal.
To end, we’d like to leave you with this extract with the ‘The 100-year life’ to reflect on.
‘Rather than ask what your 20-year-old self would think of you today, we invite you to think about what your 70, 80 or 100-year-old self would think of you now. Can you be sure that the decisions you are making now will stand up to the scrutiny of your future self?
<Foundation Family Wealth is an Authorised Financial Services Provider>