Before we consider why everyone needs a financial plan and the advantages of financial planning, let’s think about what a financial plan actually is.
According to Wikipedia a financial plan is ‘a comprehensive evaluation of an individual’s current pay and future financial state by using current known variables to predict future income, asset values and withdrawal plans’.
As a CERTIFIED FINANCIAL PLANNER™ even I find that statement confusing.
At Fortitude Financial Planning, I prefer to keep things simple.
In its simplest form, a financial plan is simply a road map for you to reach your goals.
Not your financial goals, your life goals.
We all want to have more money but money is just a tool to help us to reach our goals in life.
Do you want to retire early? Not only retire early but retire comfortably?
Fancy travelling? Plan a big family retirement holiday?
Have a proper holiday every year?
Does changing the car every three years sound good?
Consumed with debt?
You probably want to get out of your business tax efficiently.
These are all examples of life goals for which we require a financial plan to reach.
A financial plan simply connects where you are today to where you want to go and what you want to do in between.
The advantages of financial planning
Everyone needs a financial plan. Whether you’re single, married, raising children, a business owner, a PAYE worker, approaching retirement, in retirement – everyone will benefit from a financial plan.
Here are a few reasons why everyone needs a plan and the advantages of financial planning.
You’ll gain personal clarity on your life goals
The process of creating a financial plan will get you to focus on your life goals.
What you have, what you want, what you want to do and prioritize your goals.
You will know your financial reality
When you see the numbers of your financial life clearly, you know where you stand.
You are no longer relying on guesswork and you know what to do.
Once you know where you stand you can make informed decisions on your finances.
Your finances will be organized
With a plan, less will slip through the cracks.
You will know exactly what is going on and where money is going.
Family Security – protection against unforeseen circumstances
None of us likes to think about worst-case scenarios happening to us. But they can.
We have a responsibility to ourselves, our families, our spouses and children to think about them.
What if you get injured? Sick? Cant work? Pass away?
Unfortunately, our financial commitments remain irrespective of what happens.
Having a financial plan will ensure proper covers are in place ensuring financial stability should any unforeseen events occur.
You will increase your savings
You may currently save money without a financial plan but how efficient are your savings?
Creating a plan will give you greater clarity on your income and expenses.
This will increase your savings in the long run and you will be prepared for any unexpected financial shocks (see COVID-19 recently).
Maximise your tax efficiency
No one likes paying more tax than they need to right?
There’s a litany of taxes out there, income tax, USC, CGT, CAT, Exit Tax, VAT etc.
Don’t leave money with Revenue that doesn’t have to be.
You won’t need to wing it
Some people just wing it. Continue to do stuff without much preparation.
Kids college? Ah sure that money will be there. New car? Let’s just do it.
A financial plan will confirm not only if you can fund the kids college, but where it’ll come from.
New car, you’ll know exactly how much or how little you can spend.
Stop winging it, work off a plan.
Worry Less
A financial plan allows you to make informed decisions about your finances and lets you know exactly what you need to do.
This puts you in control and gives you peace of mind so you can focus on the important stuff in life.
Feel Happier
As you’re in control and have a solid plan, as well as worry less you’ll feel happier.
It gives you confidence about your finances and eliminates uncertainty, resulting in an increased level of happiness.
You’re assured you’re on the correct path to reach your personal goals and ready to deal with any unexpected shocks along the way.
When should you create a financial plan?
You can set up a financial plan anytime.
It’s never too early or too late.
No single life event triggers the need for a financial plan.
However, if you don’t have one and you incur a significant life event such as the birth of a child, receive an inheritance, redundancy or approach retirement, you should create one.
Depending on your circumstances, it may be a high-level light touch plan or it could be more comprehensive.
Different clients at different life stages have different requirements for their plan.
Isn’t a financial plan only for the wealthy
This is a common misconception and it couldn’t be further from the truth.
Financial planning is about helping people at all levels of income pursue their individual personal short and long term goals.
It’s for anyone who wishes to take control of their financial life no matter the level of income and assets they have.
Just as any person with a low or high income requires medical treatment, any low or high income person will benefit in some way from a financial plan.
The value of financial planning
This short video will outline the value of having a financial plan.
What’s included in a financial plan
Your financial plan will outline your financial reality, your goals and aspirations and what you should do.
As it’s individual, every plan looks different but they carry some standard elements:
- A statement of your net worth – this shows your assets and liabilities
- A review of your current cash flow – what is coming in every month and what is going out. Sometimes more alarmingly what appears to be disappearing off the face of a cliff
- Analysis of your goals – what do you plan to achieve in life
- Investment strategy – a suitable investment strategy factoring in your tolerance and capacity for risk and your individual objectives
- Your retirement plan – you will be able to stop working when you want to and know how that is going to be funded
Yes – I Want to Sort Out & Take Control of My Finances
How Fortitude Financial Planning Can Help You
At Fortitude we have a comprehensive financial planning service.
We will work with you and for you.
We have a simple six-step process.
It begins with us simply getting to know each other and ends with the implementation of your plan and our full ongoing support.
We don’t complicate it and we keep your financial road map nice and simple.
Financial planning is not about budgeting, it’s about being conscious of what is going on in your financial life and allocating your resources accordingly and effectively.
We don’t tell you to spend less (unless you’re spending more than you earn!!). You have to live for today as tomorrow may never come.
We encourage you and your family to live for today but through your financial plan keep a close eye on tomorrow and into the future.
Reap the advantages of financial planning and request a callback or drop me an email, francis@fortitudefp.ie.
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Francis McTaggart CFP® SIA RPA QFA
Disclaimer: All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice.
You should always engage the services of a fully qualified financial planner before entering any financial contract.
Fortitude Financial Planning Ltd will not be held responsible for any actions taken as a result of reading these blog posts.
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