Financial Plan: The Importance of Having One

There is a true saying that if you fail to plan, you plan to fail. This saying is especially pertinent when it comes to our financial affairs. Too many of us leave our finances up to chance not realizing that failure to plan will almost always guarantee financial struggle.

Why families fail to have a financial plan?

The reason many families fail to have a plan includes the misconception that a plan has to be complicated to make any sense. Also, another misconception is the need to be rich or wealthy for financial planning to be of any real benefit. On the contrary, it is usually those who carefully create and execute a financial plan, who end up being wealthy and accomplishing their financial goals.

Planning doesn’t have to be complicated. We all have financial goals and those goals are what we need to use to create our financial plans. We start with the end in mind by asking ourselves these question.

  • “What do I want to accomplish within x time period?”
  • “When do we want to retire?”
  • “When do we want all our debts paid off (Mortgage, credit cards, Lines of credit)?”
  • “How do we want to travel or do we want a cottage?”
  • “Are we going to pay for our children’s education?”
  • etc…

For example, It could be the desire to pay off your mortgage by age 50 or to retire with $10 million in savings. Whatever is important to you will go into the plan. Once you have identified and quantified your financial goals, you can create your financial plan to act as a roadmap guiding you along a path to success.

The Foundation of a Financial Plan

After setting your goals two important pieces act as the foundation, your life insurances and a budget. Firstly, insurances protect your plan from any unexpected events in your life. This includes a critical illness, death, and the inability to work. You and your family will still be on track for your goals with the proper life insurances in place. Secondly, the budget will help you to decide how much you can afford to spend, and on what, in order to meet your financial goals. A good budget takes multiple considerations and changes as your life changes. Working with an advisor to keep you on track and review the foundation will improve your likelihood of success.

Implementing Your Plan

Once your budget is established, you can get creative in how to execute your plan. There are many qualified financial advisors who should be able to guide you into creating a plan that works for you. If you are uncertain about how to proceed you can contact us by clicking the link below. Most importantly, you are more likely to accomplish your financial goals if you have a plan than if you don’t.

By: Dean Kulla, Kulla To Financial

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