Imagine waking up every morning with the confidence that your financial future is secure, no matter what life (or the investment market) throws your way. This isn’t just a dream; it’s a possibility well within reach with a written financial plan.
Whether you’re aiming to build your first $100,000, secure your retirement, or look beyond yourself with legacy or charitable planning, engaging in financial planning with a Certified Financial Planner™ can improve your effectiveness in achieving your goals. And not having a financial plan, especially when things get stormy, can feel like trying to maneuver a ship without a helm.
As I go into my 10th year as a financial planner for individuals and families, here are the top 4 reasons you need a written financial plan:
- Guide Investment Decisions
A long-term perspective based on a written financial plan helps foster investment discipline. When markets are volatile, a well-structured plan keeps you focused on your long-term goals, not the day-to-day fluctuations and headlines. Studies show that investors who work with financial planners often achieve better outcomes, not because the advisors necessarily pick better stocks or funds, but because they help investors make informed, strategic decisions consistently over time. When things get rocky, that’s the best time to call your advisor and go back to your plan before making any rash decisions. And once you see your plan working over time, you will trust the plan and not feel the need to call.
- Cash Flow and Budget Planning
Your journey to financial independence begins with understanding your cash flow. Whether you’re saving $5,000 per year or $500,000 a year, reviewing your saving strategy with an advisor can help you efficiently allocate resources today in order to achieve the wealth you want tomorrow. Effective savings strategies usually come down to making every dollar work towards your future in the most tax-efficient way possible, and allocating the risk-adjusted return of different accounts in a portfolio based on tax type and/or future withdrawal needs.
- Retirement Decisions
As people approach retirement, there is often a behavioral switch that must be addressed when preparing to live off of savings and investments instead of a paycheck. We have seen it lead to poor results like worrying and bad investment decision making.
A financial plan checks to ensure that your life’s goals are funded, allowing you to step into retirement or semi-retirement without looking back.
- Comprehensive Financial Guidance
Certified Financial Planners™ undergo years of education and an examination to learn how to look at someone’s financial plan in a comprehensive, holistic manner. This allows us to bring all areas of your financial plan together and provide the best recommendations for your situation. Other than investments, cash flow/budgeting and retirement planning which we discussed, a financial planner can consult on areas like tax strategies, estate planning, all sorts of insurance needs (or non-needs), and employer-sponsored retirement plans.
For a new client, completing your first financial plan can usually be accomplished in three to four one-hour meetings. Once a financial plan is in place, it is a living document that should be updated periodically or as needed.
If that still sounds like too much to ask, remember that if you can find a financial planner that knows what they’re doing, putting a financial plan together can provide as much value as you stand to gain. So if you haven’t ever sat down with a planner, consider setting a meeting with us, developing a comprehensive financial plan with our guidance, and stepping confidently into your future.