As the calendar shifts from the summer to the fall, we look forward to things like the leaves’ color change, football, and the beginning of the holiday season. What you might not think of is financial planning, but October is National Financial Planning Month. If you are like me, you might feel like there is a month or day to mark any occasion, but we couldn’t resist an opportunity to write about one of our favorite topics! So to mark National Financial Planning Month, and because everyone loves a list, here are six misconceptions about financial planning.
1. Financial planning will put me on a budget
Perhaps one of the biggest hesitations we get from folks when we bring up financial planning is the fear their advisor will put them on a budget. While one can only achieve what their resources will allow them to achieve, it is important to remember that a plan is created to help you accomplish your goals. It is not for the advisor to tell you what your goals should be. Sure, a financial plan might reveal that you need to save more or work part-time in retirement, but a good advisor ensures you own your plan and are comfortable with what is laid out. Putting together a plan helps you control your situation. It should ultimately give you peace of mind.
2. Financial planning is only for the wealthy
I have heard it said that the definition of “wealthy” is “someone that has more money than me.” While “wealth” might mean different things to different people, anyone with a financial goal should have some sort of a plan. In fact, having a plan will often lead to a higher net worth in the future. Simpler goals, like perhaps saving for a car, may not need a formal plan. More complicated goals such as retirement, helping a child with college, or efficiently passing on wealth to the next generation may require a more detailed, formalized plan in which consulting with your advisor is beneficial.
3. Financial planning is the same as investing
Financial planning may, and often does, include investing. However, a plan is much more comprehensive in nature. A good planner will help you consider retirement, savings, distribution planning, account location, insurance, taxation, estate planning, and any other issues pertinent to your situation. While investing is often a key piece of financial planning, a plan produces a roadmap to inform your investment strategies and allocations. Having goals and establishing a plan gives a defined purpose to your assets.
4. My quick and simple online calculation is sufficient planning
There are a multitude of quick and simple retirement planning calculators on the internet today. Many companies’ retirement plan websites will also show a simple calculation to gauge if you or on track or not for retirement. While these calculators might be a good starting point, they are certainly not comprehensive and tend to make countless assumptions that could greatly affect your success. No one plan is the same, and a good financial planner will get to know your individual situation and help formulate strategies specific to your needs. Creating a custom plan tailored to your unique goals helps ensure a higher chance of success.
5. I don’t need a financial plan until…
Many people don’t think they need a plan until they hit a certain milestone or have a certain level of assets. But the very nature of planning can help you achieve those milestones or help you reach a certain level of savings. In fact, the earlier you start planning the better chance you have of accomplishing your goals. Planning can take some work and time, but establishing goals and creating a blueprint to achieve those goals helps ensure you reach your destination.
6. Once I have a plan I am all set
Financial planning is an ongoing process. Regularly reviewing your plan is important to help you keep your goals in focus and remain disciplined. A great plan can fall apart if it is not reviewed and updated. Life also brings surprises and things can change. There are countless factors that could significantly impact our plans. We have new opportunities thrown our way. We change jobs. Family circumstances can change. As life happens, our goals and aspirations may evolve, and our plan should evolve alongside these life changes.
Financial planning is one of the core services we offer at BCS Wealth Management. No matter how simple or complex your situation may be, we can help bring you peace of mind. In collaboration with our partners at Blackburn, Childers, and Steagall, CPAs and First Covenant Trust and Advisors we believe we have the resources available to serve our clients holistically and address any financial planning need.
Finally, always remember the six Ps of planning – prior planning and preparation prevents poor performance!