Many people may not realize that they could benefit from financial planning. The Institute of Certified Financial Planners says these are the most common misconceptions people may have:
Myth No. 1: Financial planning is for the wealthy. It’s not about “getting wealthy” either, but that could happen. It is about achieving short-term and long-term financial goals, about taking control of your financial life.
Myth No. 2: Financial planning is about investing. That’s part of it. Financial planning is considering all financial aspects of your life: Taxes, insurance, retirement, budgeting and life goals. It makes those aspects work together efficiently. You must have a balance of all these.
Myth No. 3: It’s not needed until you’re older. Wrong. The best time to start is when you are young. The older you are, the fewer opportunities you may have. For every 10 years you delay saving for retirement, you have to save three times as much a month in order to end up with the same size retirement nest egg.
Myth No. 4: Financial planning requires a lot of work and a big plan. Not necessarily. Any worthwhile plan should consider your overall needs and situation. If you need help, see a financial planner for advice. It’s valuable as you calculate retirement, education and other goals.
Myth No. 5: It is a one-time effort. Financial planning is a lifelong process. A plan must be periodically reviewed and updated as children are born, jobs are changed, or investment needs are changed.
Myth No. 6: You can get along without planning. Sure you can, but it is much better to take charge of your life than to just get along.
