One of the biggest mistakes I’ve seen people make when it comes to financial planning is to ignore it completely or put it off for so long that the big benefits of financial planning expire worthless. The earlier you start planning the more bang you’ll get for your buck, however, financial planning is valuable at any age Nick Sasaki.
Most people put off thinking about planning because of misconceptions about what the process involves or how it can benefit them. As part of its public education efforts, Certified Financial Planner Board of Standards Inc. (CFP Board) surveyed CFP® professionals about mistakes people make when approaching financial planning. The survey showed the public’s most frequent mistakes included:
· Failing to set measurable financial goals.
· Making a financial decision without understanding its effect on other financial issues.
· Confusing financial planning with investing.
· Neglecting to re-evaluate their plan periodically.
· Thinking that planning is only for the wealthy.
· Thinking that planning is for when they get older.
· Thinking that financial planning is the same as retirement planning.
· Waiting until a money crisis to begin planning.
· Expecting unrealistic returns on investments.
· Thinking that using a planner means losing control.
· Believing that financial planning is primarily tax planning.
Make Your Money Count with A Plan
To avoid making the mistakes listed above, realize that what matters most to you is the focus of your planning. The results you get from working with a planner are as much your responsibility as they are those of the planner. To achieve the best ROI from your financial planning engagement, consider the following advice.
Start planning as soon as you can: Don’t delay your financial planning. People who save or invest small amounts of money early, and often, tend to do better than those who wait until later in life. Similarly, by developing good financial planning habits, such as saving, budgeting, investing and regularly reviewing your finances early in life, you will be better prepared to meet life changes and handle emergencies.
Be realistic in your expectations:Financial planning is a common sense approach to managing your finances to reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control, such as inflation or changes in the stock market or interest rates, will affect your financial planning results.