Many people could benefit from financial planning, but they’re hesitant to get started because they don’t quite understand it. So, I’ve debunked four major myths to help you better understand the importance of financial planning.
Myth No. 1: Financial Planning Is a Product
A lot of people assume that a financial plan is a product they buy once, and then they’re set for the rest of their lives. Wouldn’t that be great?! Realistically, financial planning is not a product — rather, it’s a long-term process of budgeting, managing and mapping out your finances so you can use your money to achieve your goals. Financial planning gives you a clear picture of where you stand today, then provides the direction and discipline to help you get to where you want to be tomorrow. It’s very similar to a road map that gets you from Point A to Point B in the most efficient and effective way.
Myth No. 2: Financial Planning Is Just for Rich People
Financial planning is a necessity — not a luxury — and everyone needs it. Whether you’re making $30,000 per year or $300,000 per year, financial planning is a way to help you manage your finances and learn what you need to do to grow, protect and use your money to live a life you can enjoy every year.
Myth No. 3: Financial Planning Is an Exact Science
Financial planning is the art of navigating the different challenges and concerns of any given life stage. Yes, of course, you will be able to develop a plan, but the art is in finding the best way to achieve your goals given all the different variables. For example, maybe your financial plan confirms that you will need to save $300 per month toward your retirement goal — that would be the science part. The art is deciding which retirement account would be best given your income level, tax bracket, etc., as well as finding the right investments to go within that retirement account.
Myth No. 4: Financial Planning Is Boring
Financial planning can be exciting and fun, but you’ll need to make sure you bring that energy into the equation. If you’re always stressed, overwhelmed and anxious when you think about your money, then that’s exactly what you will experience when you deal with your finances. You get out whatever you put in, so check in with your emotions and make sure you are bringing positive energy into your financial planning endeavors.
In summary, financial planning isn’t about just about “getting rich” or finding the hottest stock, it’s about helping you reach your life’s goals. It’s a lifelong process, and one you should start as soon as you can.
Brittney Castro is a member of the DailyWorth Connect program. Read more about the program here.