Most people never consult a personal financial planner. ThinkAdvisor states that, in a recent survey, "Sixty-eight percent of respondents said they did not have a trusted advisor who offered comprehensive lifetime financial planning." But why not? There are lots of different reasons. Maybe you feel like there's no time to discuss your finances in depth. Maybe you feel like your finances aren't significant enough to warrant hiring a professional. Maybe you feel like you could do it better yourself. Or maybe you simply want to skip the expense.
Whatever your reason, you should probably reevaluate your decision. A personal financial plan is usually a necessity if you want to keep your finances in top shape. Here are a few reasons why:
1. Your income is your biggest asset.
For most people, your income is your greatest asset. It's the source of most (if not all) of your money, so you need to make it work for you. Financial planning helps you direct your income so it's utilized the best way possible.
2. Your spending and expenses may need some tweaking.
Unless you're a financial advisor yourself, your spending habits could probably use some adjusting. With a financial plan, you'll see where you spend money and where you can cut back. You'll also see which expenses are essential and which ones can be cut from the budget completely - or at least minimized so you have more money to use elsewhere.
3. You may actually be able to invest - or invest even more than you do now.
If you're not investing now, the biggest question is "why not?" Do you feel like there's no extra money to use for investing? If so, a financial plan may help you free up some cash so you can start preparing for the future. If there simply isn't enough money to invest now, a plan will help you determine how much income you need to invest soon. If you're already investing, you may find extra cash to add to the pot.
4. You'll make sure your standard of living is met.
Maybe you feel like you have a comfortable life, or maybe you wish for a bit more. Either way, you need to ensure the lifestyle you currently have is as secure as possible. A financial planner can analyze your lifestyle and recommend solutions to help secure it for the future. This may include life insurance, retirement accounts or other safeguards.
5. You'll discover your net worth.
Do you know your current net worth? This is an important step to any financial plan, but many people skip it when calculating their monthly budget. A financial planner can help you determine all your assets and all your liabilities. Your plan should offer a clear picture of your net worth by evaluating the value of each asset and subtracting the liabilities.
6. You'll establish a savings plan.
If you don't already have a savings cushion for emergencies, you need a financial plan ASAP. Your savings is the only way to protect yourself from emergencies that aren't covered by insurance (like deductibles). If you're struggling to save, a financial plan can help you find a solution.
7. You'll understand your finances - and probably rest easier at night.
If finances are stressing you out, it's time to make a plan. You may avoid the task because you're worried about the big picture, but it's better to know than to worry. Most people actually breathe a sigh of relief once they have a plan - no matter what their financial situation - because they now have a way to solve their financial problems and save for retirement.
If you start now, you could be one of those people, resting comfortably each evening with money in the bank and a secure financial future!