Do You Need A Written Financial Plan?

Never answer a question with a question. That’s what we were all taught, right? Sure, answering a question with a question is a way to frustrate the hell out of someone who wants a direct answer. But, in other cases it’s quite appropriate. Case in point: Whenever I’m asked about the need for a financial plan, break the cardinal rule over and over, answering that question with questions like:

What would happen to your family if you weren’t here tomorrow?

What impact would a bad injury, leading to disability, have on you and your family?

Are you protected from catastrophic loss from an accident or event of nature?

Will you be able to pay for your child’s college education?

Are you paying more in taxes than necessary?

When will you, or can you, retire?

What does retirement look like for you?

How much money is enough for your retirement?

Will you outlive your money?

Are you maximizing your investments?

How much do you want to gift, and to whom?

These questions, and many more, may, or may not, be new to you. think we’ve all posed and considered similar questions, from time to time, over and over. But, my hope is that by asking these questions anew, a thought begins to take shape — that these questions, and their answers, vanish into air when they are not transformed to permanent form.

The bottom line is, people that do not have a formal financial plan actually have an informal financial plan. This informal financial plan is their historical pattern of financial decision making and financial behavior. When woven together, this historical pattern of financial decision making and financial behavior may be as difficult to change as any other habit.

The time and effort it takes to ponder important questions, think deeply about them, and produce a refined financial plan offers many lasting benefits. You can create an integrated plan that may cover risk management, college funding, tax planning, retirement planning, investment planning and estate planning. You can clearly identify goals and objectives and improve your ability to plan for their achievement. You greatly improve awareness of the myriad of choices available. You identify significant risks. You bring both order and discipline to your financial affairs and make informed decisions.

Most importantly, a plan exists. It can be read, over and over again as necessary deepening your commitment.

When you understand, internalize, and write down what you want to achieve, why you want to achieve it, and how and when you can achieved it, you take ownership of your financial plan. And, you’ve also developed a powerful change agent that can help you break the chains of habitual financial decision making and financial behavior.

With so much to gain, the answer seems clear. But, I’ll go ahead and answer a question with a question,… Do you need a financial plan?

About Nirbhaya 17799 Articles
Nirbhaya has been interested in doing something on his own from the days when he was in college. But, things didn’t favour him in the beginning, and he had to work for others. Later, he finally started Onhike.com as a news portal, and then never looked back. The website is gaining popularity every day. He puts all of his skills into his work and making his dream come true. He covers Tech and General news on this website.