A financial plan is sort of like an emergency kit for your car - you don’t think you need one, until you really need one. For many, an emergency often prompts interest in future financial plans, as opposed to leaving us in a position where we need to tap into funds that are already in place. Whether it’s the loss of a job, mortgage increase, or theft, we tend to lean on the old motto ‘I’ll cross that bridge when I come to it’.
So, here’s the bridge: financial planning is a necessity. It’s not just a budget; a financial plan is a complete and comprehensive evaluation of your past, present and future financial state. It allows you to plan out short-term and long-term investments and set goals for yourself, so you can stay the course. OK - it can be a lot more interesting than it sounds!
Whether you’re concerned about paying rent or saving for retirement, a financial plan can help. Here are 3 reasons why you need a financial plan.
1. Prioritization of funds
Contrary to popular belief a financial plan isn’t just about how you should save your money, it’s about how you should spend it too. A financial plan helps to prioritize where you want to allocate your money and can be the difference maker when deciding to go on a trip now vs. later (everyone wants now right?). If saving for a university fund is your priority, a plan can be tailored to that end as well. Ultimately a well-designed plan can suit any objective and lend you some financial breathing room as you make your way there.
Savings, investments, debts, travel insurance, retirement planning, estate planning - a financial plan covers it all. There’s a certain security in knowing exactly where your money is going. Not only does a financial plan leave space for peace of mind, strategically placed funds can save you quite a bit on taxes. It never hurts to be too organized with money, and at the very least a financial advisor can help to clear away the smoke and mirrors of the financial world. In the words of famous Billionaire Warren Buffet “The more you learn, the more you earn.”
3. Less stress
Money is one of the most predominant causes of stress in modern society, no matter how much of it we secure for ourselves. It rings true that the quantity of our funds does not alleviate the stress of securing it and using it effectively. If you’re not one to mind handing the reigns over, a qualified specialist can help you to develop and manage a financial plan that’s both effective and future proof, in addition to taking the stress out of the development and execution phase. Alternatively, if your goal is to directly influence every aspect of your portfolio, a solid financial plan will lend itself to alleviating stress in the long run, as investment and savings habits become routine or automated. It’s a less immediate solution to handing off that burden, but it affords you some additional insight.
If you have any questions on financial planning or want to start putting your own plan into action, don’t hesitate to contact us here or reach out to us on social! Even if you’re already a financially-savvy individual, getting a second opinion is always a smart move and our financial advisors are more than happy to help.