Whether you want to buy a house, fund your child’s education, or build up a large retirement nest egg, you likely have a financial goal (or a few) in mind. The question is, how do you get there? Here, we look at why financial planning is essential to achieving your personal and financial goals and how working with a financial advisor can help.
Why Financial Planning Matters
Sure, you could simply put away some savings, contribute to your retirement plan, and hope for the best, but this isn’t the best avenue toward reaching your financial goals. Instead, you need a written financial plan.
A document defining your goals and the steps you’ll take to get there, a financial plan is key to setting you up for financial success now, and in the future. It gives you a complete look at your current financial standing, helping you identify areas for improvement across some or all aspects of your finances, such as tax planning, cash flow analysis, estate planning, investment management, and more.
While the process will look a bit different from person to person, financial planning gives everyone greater control over their money and instills a sense of confidence and security.
Don’t Make These Financial Planning Mistakes
Avoid these common mistakes to get the full value out of the financial planning process.
Procrastinating your plan
People put off their financial planning for several reasons. They may feel they need to wait until their career kicks off, or they think having a mental plan is sufficient. However, without a comprehensive written plan, understanding where you’re going and how you can get there efficiently is much more challenging. What’s more, you miss out on the power of compounding and may need to invest more money than you realize to make up for the lost time.
Not having an investment strategy
Too often, individuals make their investments on an ad hoc basis. Maybe they saw their friends making a specific investment or wanted to hop on the latest investment trend. Whatever the case, they aren’t accounting for their personal needs, risk capacity, and risk tolerance, which is a recipe for losses.
Not reviewing your plan regularly
A financial plan is a living document that evolves alongside your needs, priorities, and objectives. If you approach it with a “set it and forget it” mindset, you’re more likely to experience major financial missteps and have a more difficult time achieving your goals.
How Can a Financial Planner Help?
Reaping the benefits of a financial plan can be difficult without the proper knowledge and tools. Luckily, you don’t have to go it alone. Here’s how a certified financial planner (CFP) can help you get the most out of your money.
Financial Expertise
Perhaps the most obvious advantage of working with a financial planner is gaining access to a financial expert who’s committed to supporting your goals. Leveraging their knowledge, experience, and resources, your planner helps you develop the informed strategies you need to improve your financial standing and feel confident in your future.
Behavioral Coaching
Personal finances are innately emotional. Keeping your emotions in check can be even harder during market downturns. As your unbiased guide, a financial planner is there to help you look past your impulses and maintain a long-term outlook so you don’t make any hasty, ill-informed decisions.
Accountability
It’s not enough to create a plan. You need to put it into action too. Your financial planner acts as your accountability partner, helping develop your financial plan and ensuring you take the necessary implementation steps that bring your plan to fruition.
Time Savings
From conducting research to developing personalized solutions, the financial planning process involves numerous steps that someone with the right background knowledge can execute faster. In other words, when you work with a financial planner, you can essentially buy yourself extra time to focus on the things you care about most.
Are you ready to develop or revise your financial plan? Contact us today to learn more about how we can add value with our relationship-based approach to comprehensive financial planning.
