5 Ways Financial Planning Can Help

Most of us are aware of the importance of saving money.

People tend to fall into two camps when it comes to actually doing it: non-planners and planners. Non-planners save when they can, perhaps putting a small amount into a workplace retirement plan, in the hopes that everything will work out in the end. Planners usually have a good idea of what they’re saving for, how much they need to save, and how long it will take them to achieve their objectives.

Do you identify with the first type? If that’s the case, you’re not alone: According to Schwab’s 2021 Modern Wealth Survey, only 33% of Americans have a written financial plan. Nearly half of those who report no financial plan say they didn’t have enough money to make a plan worthwhile. Others claimed it was too difficult or that they lacked the time to devise a strategy.

In the midst of daily life, planning anything more than a few days ahead of time can seem daunting. It’s natural to wonder if financial planning is truly beneficial and we strongly believe that it is.

The 5 Ways Financial Planning Can Help You Reach Your Goals

We believe a written financial plan can help you reach your goals. The following are five reasons why:

1. A written financial plan increases confidence 

Seeing your plan in print reduces the “fear of the unknown” about your future finances. According to the Schwab survey, 65 percent of people who have a written financial plan feel financially secure, while only 40% of those who don’t have one feel the same way. Only 18% of non-planners felt “very confident” that they would achieve their financial goals, compared to 54% of planners.

A written financial plan provides you with a measurable goal to strive for. You can reduce doubt or uncertainty about your decisions by tracking your progress and making adjustments to help you overcome obstacles that could derail you. 

2. A financial plan can jumpstart savings, even with a small amount of money

“I don’t have enough money,” is the most common reason given for not having a plan. This is a misunderstanding. Starting to plan, even in small steps, does not require large sums of money.

Financial planning, in fact, can have a significant impact on low-income households by assisting them in improving their saving and budgeting habits. A written plan aids savers in prioritizing their objectives and, as previously stated, provides a means of measuring success.

3. A financial plan can help you create an investment portfolio

Your financial plan can give you a complete picture of the situation: you’ll know what your objectives are, how much time you have to achieve them, and how much risk you are willing to take in pursuit of your goals. You can figure out how to achieve each individual goal once you have a comprehensive view.

With your financial plan as a guide, you’ll be better able to make informed investment decisions rather than winging it and hoping for the best. This plan will entail both saving—putting aside the money you’ll need in the short term or for emergencies—and investing—putting aside the money you’ll need in the long run and that can, ideally, grow.

4. A financial plan can lead to better habits

According to research, good money habits are aided by planning.  Financial planning is about more than just investing; it’s also about what money can do for your confidence, security, and quality of life, such as the protection provided by life insurance or the peace of mind provided by an emergency fund.  

A financial plan is the roadmap that guides you and keeps you heading in the right direction.

5. Planning can be tailored to every personality type

Every decision you make, including financial ones, is influenced by your attitude toward life. You can take proper steps toward achieving your financial goals by understanding the type of person you are when it comes to planning.

According to Charles Schwab’s Modern Wealth Quiz, there are different personalities when it comes to financial planning.  Whether you are an “Organizer”, “Dreamer” or “Maverick”, a financial plan can be drafted and adapted to match the best approach for your personality type.  

Understanding the approach that works best for you can make the financial planning process far more personal and productive.

How A.G. Campbell Advisory Can Help

A.G. Campbell Advisory, LLC is an independent investment advisory firm with offices in Baltimore, Maryland and Naples, Florida, offering individuals and institutions custom investment advice, financial planning and family office services.  A.G. Campbell was founded in 2012 by veteran industry professionals to address the need for a high-quality firm where clients have access to the resources of a large firm, without the inflexibility and conflicts of interest inherent in a larger financial institution.  The principal objective of A.G. Campbell is to advise our clients on how to grow and preserve their wealth for themselves and for their families.  Our client’s best interests are of paramount importance and the foundation of our work.