Ask someone whether they've created a long-term financial plan and they are likely to answer, "Not me...I'm not rich enough, old enough, etc..." While most people realize the importance of financial planning, there still exist several misconceptions about who it can benefit and how to get the most out of it.
Myth #1: Only wealthy people should develop financial plans. Financial planning is for anyone who wants to achieve either short-term or long-term financial goals, such as retiring, attending college, buying a home or leasing a car.
Myth #2: Financial planning is just about investing. While investing your money as you strive to reach your financial goals makes good sense, keep in mind that financial planning also involves the proper handling of your taxes, insurance, retirement, budgeting, estate planning, and life goals. A comprehensive financial plan should coordinate often competing financial aspects of your life while developing strategies and objectives that enable these aspects to work together effectively to meet your goals.
Myth #3: Financial planning is for older people. If you want to meet your financial goals, you need to start now, no matter what your age. Waiting until you are older limits your financial opportunities and your ability to bear some risk. For example, every ten years you wait to save towards retirement, you must save three times as much per month in order to reach the same size retirement account. If you wait too long, many financial strategies will become useless or less effective for you.
Myth #4: You only need to create a financial plan once. While implementing a financial plan is important, just as important is the maintenance of your plan. Financial planning is a life long process. Every time your financial situation changes, such as getting married, moving or having children, you must review and update your financial plan. Changing markets and personal needs may dictate an adjustment of your financial plan. Changing tax laws may also require additional adjustments.
A little planning now for your financial goals will save a lot of grief and panic in the future. If you are interested in finding out more about how you can benefit from financial planning, please contact our office.
The information presented in this document is of a general nature only and should not be relied upon to replace professional advice. Before acting on this information, talk with a professional advisor as laws and regulations are constantly changing. Readers accept full responsibility; no document found here is a substitute for a consultation.