With 16 years of financial planning experience, I've learned that financial planning isn't for everyone. Financial planning is a process. The process requires the right mindset, commitment, realistic goals, and realistic expectations. Here are 7 reasons why financial planning won't work and how to make financial planning work for you.
- You aren’t really that interested in having a financial plan
You know you should be doing something. It’s been your New Year’s resolution for the last 3 years to start investing. Somehow, for some reason, you just aren’t ready yet. If you aren’t interested, financial planning isn’t going to work for you.
- You chose the wrong planner
Choosing the right planner is a serious decision. You engage in a relationship that should be built on trust, honesty, and respect. What did you expect to receive from your planner? Was the planner more interested in talking about themselves, the markets, and geo-political events or did they focus on you? Did they ask you questions? Did they listen and really hear you? Were the questions they asked open ended? Were the questions focused on you, your goals, your passions, your concerns? Did they earn the CFP® designation? You can find out at HERE.
- You aren't using a financial planning system
Just because you engage in financial planning with an advisor doesn't mean you will be receiving a written financial plan. Some advisors believe that their clients don’t really want all the detail. Using a yellow legal pad, white board, or word document to create your plan is less effective, in my opinion, than using a financial planning system.
- You won’t implement the plan
Why go through the expense and spend the time involved in having a financial plan if you aren’t going to implement the plan? Depending on your current financial situation implementation can range from a simple step like cutting up a credit card and closing the account to increasing the percentage of your retirement account contribution. It could be more complex like selling a business or a property. If the plan warrants taking action and you don’t…what was the purpose of engaging in the financial planning process in the first place?
- You think that financial planning is a one-time event
How has your life changed in the last year? What about the last 15 years? Would it be safe to say that your goals in your 20’s are different than your goals today? You are making more money, your lifestyle has changed, you have kids, debt, a bigger house…your plan should be updated annually to reflect changes in your goals and lifestyle.
- You bought a Do-It-Yourself financial plan. You aren’t the DIY type (for anything)
You’ve heard the warning on commercials, “Don’t try this at home”.
Need I say more?
- You have the wrong mindset about financial planning
You want a quick, easy and cheap financial plan.
You blame others for your current financial situation.
You aren’t ready to take responsibility for your financial future.
You think the planner just wants you to invest more or buy more insurance.
You would argue that this isn’t true, but you are planning to react to events in your life rather than being proactive with a financial plan. By not planning, you effectively have a plan. Your plan is to NOT have a plan.
How To Make Your Financial Plan Work For You:
First, consider that ultimately you are the one who makes your financial plan work. From the beginning through plan completion, be prepared to provide any and all data requested by your planner. Working from estimates and guesses isn't as good as having the most up-to-date data. Once the plan is complete, there are the implementation steps. A good planner will work with you to prioritize action steps as well as set deadlines for completion of those action steps.
Financial planning isn’t for everyone. It is for those with the right mindset. Do you have questions that include both dollars and dates? You are asking quantitative questions that can be analyzed through your financial plan. Do you have questions that don't include dates and dollars? You are asking qualitative questions. The best financial planners work will with their clients in a way that blends both quantitative and qualitative goals.
Do you see value in hiring a CFP® professional?
Are you are ready to engage in the process?
Will you implement the plan and make adjustments overtime?
Are you committed to designing your financial future?
If you answered "yes" to these 4 questions, why wait?
Melissa Myers, CFP®
Melissa is a Gen X business owner and CFP® professional. She teaches what she has learned on her way to success. She wants to share her secrets to prosperity through financial planning with you. Call or email Melissa at (231) 733-1166 or firstname.lastname@example.org.