It's important to view person finances holistically to better create your personal finance plan. An easy mistake to make is to only concentrate on one aspect of finances. We know saving for retirement is necessary for most people's financial success, but if that is your only focus it can be problematic.

For example, if you only pay attention to retirement savings, you may neglect saving in your emergency fund. If an unexpected event happens costing $5k or more, without an emergency fund, a person can be left desperate to pay for an emergency although their retirement savings are above average.

This desperation could cause the person to pull money from retirement to pay for the emergency which is counter-productive for saving for retirement and could cause a 10% penalty. Also, without viewing personal finances holistically, it can put you in a bind that can cause other poor decisions such as payday loans or maxing out credit cards.

To approach personal finances holistically, think about the big picture. If you decide to remove debt first, build an emergency fund next, and then invest for retirement how does each step affect the other?

Here is an example: if you spend most of your life paying down debt you have less money to save for emergencies. When emergencies happen you're likely to go further into debt to cover the expense. This cycle can continue and then you hit retirement age with nothing substantial to live on. Instead of allowing this to happen think of your personal finances holistically and choose faith over fear for your finances.

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