Surprisingly, most people have the wrong ideas about financial planning. Financial Planning has often been confused, misconstrued, and mistaken for almost everything except what it truly stands for. The myriad financial planning of myths floating around adds to the chaos. In this blog post, we’re busting the ones we hear most often!
Fact #1: Financial planning benefits everyone because it helps balance living for today with preparing for the future. The strategies of financial planning work for all ages and all levels of income. It is never too early or too late to start, nor must you be wealthy to have a plan. Planning helps everyone successfully use their assets to build wealth over time.
Fact #2: Did you know that in Australia, high school students consult financial planners on funding strategies for college? Taking money seriously is a sign of maturity. Prompt planning establishes good financial habits and provides a strong foundation. Young people also have time on their side. So, money has the time and space it needs to compound. Starting early means saving less over time. The sooner you start making smart financial decisions, the sooner you can be on the way to achieving your goals.
Fact #3: As our needs and wants change over time, it is unlikely that our financial circumstances will stay the same throughout our life. Naturally, financial plans will change too. For example, as you approach retirement, your attitude and priorities will change. First, you would embrace less risk. Second, you would prefer to add more to your retirement account. One cannot expect their first financial plan to last forever. Financial plans must account for lifestyle changes and emerging goals.
Fact #4: Indeed a financial plan enables peaceful retirement. But retirement is only one of many goals within a financial plan. One of the most crucial aspects of financial planning is balancing retirement savings with other needs.
Planning gives you direction and lays out your options. You can allocate money responsibly by determining and prioritizing your goals. You may find financial trouble if you only save for retirement. Constantly dipping into your retirement savings to fund other financial goals – will leave you stressed and unprepared for retirement.
Fact #5: Unfortunately, many people interchange investing and financial planning. Planning is more holistic whereas, investing is specific. Planning helps you map investments to goals, take the right level of risks, and get your asset allocation right.
Most myths around financial planning are due to a lack of awareness. While financial planning is for everyone, it is not something one can do on their own. So, hire us, we’ve made 500+ families feel secure, we could do the same for you!