Previously, we discussed the importance of partnering with the right financial advisor. Now it’s time to put together a comprehensive financial plan. At each step of your life you will face choices that may impact your finances. Furthermore, each financial decision or action can affect other components of your financial life and overall financial outlook. For example, saving for college can affect how you save for retirement, while saving for retirement can affect how you spend today, etc.
A survey released 7/14/2011 by the Certified Financial Planner Board of Standards, Inc. reveals that Americans with a financial plan are more upbeat about their own personal economic outlook. With 1,011 adults participating in the telephone survey, the findings regarding financial planning showed that:
- 58 percent of respondents indicated that they would feel more confident about their finances if they had a financial plan in place.
- 86 percent of respondents agreed that everyone should have a financial plan.
- 79 percent claimed to have a financial plan, but the majority do not actually have an official, written document. 46 percent said they just have a plan in their heads, and 11 percent have taken notes about their intended plan. 42 percent had an official written plan.1
These findings suggest that people understand the importance of a financial plan but are not taking the necessary steps to create one. It poses the question: Why not?
Many times people say that they don’t have enough time or money to meet with an advisor. That may be so, but the truth is that financial planning is a lifelong process and the sooner you start, the better off you’ll likely be in the long-run. Having a plan can remove the guesswork out of managing your finances and help you stay on track in times of uncertainty. It can also help you better understand the opportunities and costs involved in every financial decision you make. Whether it’s budgeting, saving for education, retirement planning, managing your taxes, investment management, insurance coverage or estate planning, it’s beneficial to have a comprehensive financial plan.
Ultimately, you are in charge of your finances, so what are you waiting for?