An Overview of Holistic Financial Planning

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Generating Wealth
Agricultural effort produces income deriv
ed from sunlight energy.  Sunlight energy is packaged into marketable products that can be sold, such as a grain or vegetable crop, meat, milk, wool, or hair.

Solar energy is the first to be converted by plants into a useable form for all other organisms—micro-organisms, invertebrates, livestock and of course, humans.  To maximise this conversion there needs to be effective water and mineral cycles and a biologically active soil (high biodiversity).

In holistic financial planning, the expenses that receive the highest priority are those which will help generate “new wealth” from “solar dollars.”

Importance of the holisticgoal to the process
Financial planning to achieve a true profit is best done towards an holisticgoal.  By now you may have formed an holisticgoal for your ‘economic whole under management’.  The holisticgoal should have all the values that are important to you included in its Quality of Life statement.  These values should all be supported by different forms of production that will allow you to sustain the experience far into the future.  

In turn these forms of production should be supported by a futuristic description of your land in such healthy condition that it will sustain your quality of life indefinitely.  Needless to say, there is only one way to achieve this desirable state of affairs—and that is decision by decision!

The brief period of the year when you do your financial planning is when perhaps 90% of your annual decisions will be made.  These are the decisions that will bring about your holisticgoal.  

To produce your holisticgoal you will need to produce a profit and you will have costs.  The things you produce for sale and the things you use to produce them, plus the landscape you intend to produce, will require the use of creativity, money and some of the other tools.  As you move through the process, each of the tools and the way you plan to use them will be tested for movement towards your holisticgoal.

Almost no farm goes bust because of droughts, market shifts, government programs, the wrong breed of livestock, crooked fences, or the many other things that are often blamed.  Almost every property that goes under does so because of poor financial planning.
When managing holistically the financial planning—more specifically it should be called ‘wealth generation’—revolves entirely around decision-making.  Decision-making is, after all, what managing holistically is all about.

Past practice

As far as can be determined humans have made their decisions just one way from the Stone Age to the Atomic Age: towards fragmented goals—‘a better life’, ‘greater security’, ‘increased production’, ‘better problem solving’, or ‘preservation or eradication of something’.  When making these decisions it seems we and all our forebears have tested our actions by considering them, either deliberately or non-consciously, having regard to many factors including but not limited to things like: expert opinion, past experience, intuition, research findings, peer pressure, laws, regulations, compromise, etc.

New practice

With a comprehensive holisticgoal established it makes sense to make all future decisions towards it.  All past knowledge, research, and expert opinion is still considered, but no action will be taken until each is subjected to the Seven Testing Guidelines and tested towards the holisticgoal.

Why you would want to do this

In 2009 one of the families we work with in Western Australia, Trevor and Jacki Bunce, shared this graph with a local group.  It shows the way their business was trending before and after attending a training program, and becoming part of a management club that meets regularly.  The black line shows monthly closing bank balances (adjusted for some one-off payments, such as the cash payment made for a new tractor).  

Early each year the black line rises as grain receipts come in, and gradually declines as the next crop and living expenses are met.  What is clearly visible is that each year the highs are getting higher and the lowest balance is higher every year.  This is the opposite of the previous trend, where each year the bank account ran closer to zero, and each high point was lower than the previous year.

Here is the extraordinary thing: Trevor and Jacki reduced the scale of their operation by dropping out the lease of land (reducing their scale of operation by about 50%).  They substantially reduced the area of crop sown, and sold off their sheep (wool) enterprise.  They expanded their existing self-replacing boer goat enterprise.


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