What is a Financial Plan & Why Should You Have One?

I need a Financial Plan! This is a very common statement I hear when dealing with new clients. But what is a Financial Plan, what is its purpose, what does it cover, how does it help you? Most people who ask for a Financial Plan have little understanding of what it is or what it does. To keep it simple I have listed below the things a Financial Plan should not do and what it should do.

Things a Financial Plan is not...

• It is not a sales tool; a free financial plan is written to convince you to invest your money with someone.
• It is not a legal document which allows you to sue the planner if things do not work out as you wanted. Unfortunately, governments and lawyers have taken the common out of sense and you now have a financial plan which looks like war and peace.
• It does not tell you what you need to do or make you rich.
• It does not solve all of your financial problems
• It is not a budgeting tool, we often get asked to prepare a budget for people.
• It is not a set and forget document, it is not something which you do once and never revisit.

Reasons for having a Financial Plan completed...

•  To provide you some guidance in achieving your financial and personal goals.
•  Explain to some the technical issues which surround financial investments.
•  To help you express in words what you want to achieve.
•  It is a reference tool which needs constant review to keep you focused on your goals.
• It helps you set saving targets and goals, a plan helps you break down the end goal into smaller achievable parts. It tells you what you need to do each year, month, week and day to achieve the financial independence you seek.
•  It allows your financial adviser to better understand where you want to go and as such helps them help you.

A Financial Plan will not solve all of your financial problems it merely sets you on the right path and helps make sure that you stay there. The foundation of a good financial plan is a good financial planner. Spend the time to find the right person as you will be working with them for the rest of your life.

If you would like to know more about how a financial plan can help you contact us on 4771 4577.