One 2021 study found that only 33% of us have any kind of written financial plan in place, with many believing they simply don’t earn enough money to warrant putting one together. The rest either haven’t even thought about it or simply assume it would be too complicated. But planning for your future doesn’t have to be complex or intimidating.
In fact, without financial planning advice and a strong goal in place, you could find yourself spiralling. We all know the benefits of diet and exercise, after all, but how many of us truly understand the benefits of financial health?
Risks associated with a lack of financial planning include:-
1. Not achieving your financial goals – Planning where you want to be financially is the only true way of ensuring you will actually get there. You can’t reach your financial goals if they don’t even exist, after all.
2. Delaying your retirement – A big part of your financial plan is going to be your retirement age. Most of us like to think we’ll be able to retire by the time we hit our 60’s. A financial plan will allow you to achieve this far more realistically. You might even be able to lower your retirement age by a few years.
3. Leaving nothing behind – We all like to think we’ll be able to leave something behind for our loved ones after we’re gone. With inheritance laws always changing, the only way you’ll be able to ensure you know exactly how much your loved ones will be getting from your estate after you’ve gone is to keep a thorough financial record of all your comings and goings.
4. Taking on more risk than necessary – Without a plan, everything is a risk. From making investments to general life risks. A financial plan will let you know which risks you can afford to take and which you should be giving a wide berth.
5. Lacking focus – You’ve undoubtedly heard the phrase “jack of all trades, master of none.” Without a plan, you are liable to try just about anything without a central pivot point to keep you on course. This is particularly true when it comes to financial investments. There is certainly wisdom in diversifying your portfolio but put too many eggs in too many baskets and you’ll soon find yourself dizzy with all the juggling.
Financial planning is about laying down the foundations for the rest of your life. It’s not a short-term plan, it’s one that could stretch 40 or 50 years into the future. If you need help with your financial plan or are confused by all the jargon, there are many professional planners and wealth management firms online waiting to take your call and guide you through the process.