I am a Financial Advisor in-training, and although I clearly see the demand, it still baffles my mind how few people understand the importance of financial planning. Why do they end up in that situation? Quite simply, they do not understand the process.
Many feel as thought they just don't have enough money accumulated to warrant financial planning (i.e. it's only for the rich), and many thing that financial planning is only about doing one or two parts like making a stock portfolio or buying insurance. Some thinking that the services of a financial advisor will be too high and they are concerned with the fees involved long term.
Lots of people avoid financial planning for one simple reason: fear. They are afraid of what the process will uncover; about themselves, about their partner, and the fact that someone else outside their family will know about their situation. This is the same mentality that keeps people from visiting the doctor when they think/know something is wrong because they are worried about what they may learn.
The biggest reason people avoid planning? Procrastination. As the old adage goes, "people do not plan to fail, they just fail to plan." In the most basic process of financial planning takes time and energy, which people are just not willing to exert. Regardless, the reality is clear: failure to plan now will mean failure in the future, and with all important tasks, the best time to start is NOW!
Below is a very broad list of the steps you need to commit to before you begin the financial planning process. Are you ready? I thought so. Keep reading GradMoney for more awesome tips!
Set measurable goals—you're more likely to stick to them if they can be measured.
Understand the effect your financial decisions have on other financial issues
Reevaluate your financial plan periodically
Start now—don’t assume financial planning is for when you get older
Start with what you’ve got—don’t assume financial planning is only for the wealthy
Take charge—you are in control of the financial planning engagement
Look at the big picture—financial planning is more than just retirement planning or tax planning
Don’t confuse financial planning with investing (investing is only a small piece of the financial planning process, which also includes tax management, retirement planning, insurance, and estate planning).
Don’t expect unrealistic returns on investments
Don’t wait until a money crisis to begin financial planning
(This article was originally published on GradMoney on July 28, 2017)
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