Financial Plan Aversion?

Do you have a Financial Plan? If not, why not?

From my experience, here are some of the reasons that I believe contribute to people having a "Financial Plan Aversion".

Reason 1: It’s Boring!

“Financial planning is boring. I just want to get on with the ‘doing’ – i.e. investing!” is what we hear a lot. The financial planning process can seem more like a chore and can even appear quite daunting to some. However, I strongly recommend that all investors have a plan of some sort – even just a simple plan is better than no plan at all.

By creating a plan you will understand “how much” you need to invest to achieve your financial goals. How horrified would you be if you thought you had a great portfolio of investments only to find out too late that it’s falling short.

The longer the time-frame you have to reach your financial goals then the easier it will be to achieve them, and a greater chance that you will exceed them! So, the sooner you have a financial plan, and start investing at the right level of investment, the better!

Couple doing their Financial Plan

Reason 2: Planning makes it all too Real!

People seem to prefer to have their “head in the sand” and are reluctant to plan for the future. In New Zealand we call this a “she’ll be right” attitude. It’s like the future is too far away to worry about, and thinking that things will magically come right in the long run.

Perhaps some people feel it’s too depressing to think about how poorly they are prepared for the future. Or, they may think they’ve “missed the bus”, or worse, think they’ve got plenty of time before they need to worry about getting their financial future sorted.

Creating a financial plan and analysing where you are at on the journey does “make it real”. It requires you to put numbers and timeframes down on paper and take responsibility. However, rather than ignoring the situation, how good will it feel to have a plan in place for how you will meet your financial goals? How good will it be to know you will not be a burden on others when you grow old? It’s certainly not anyone else’s responsibility, so I recommend you jump in and commit to your future financial success.

Reason 3: Living in the Now

“You only live once, and I might die tomorrow, so I’m going to enjoy life while I can”, one friend told me. People don’t like thinking about the future. So much so that a lot of people don’t have a will because they can’t bear the thought of having to plan for their eventual death.

This ‘living in the now’ attitude may be the reason why people have become great consumers, instead of budgeting, planning their financial future and becoming financially savvy. How many times have you heard of people winning large amounts in lotteries and then a few years down the track ending up broke? Or famous musical or sporting stars who fall on financial ‘hard times’ later in life when they no longer have the huge incomes they enjoyed?

It’s not about penny pinching, and not enjoying life right now, in order to one day be wealthy. It’s about balance and thinking strategically. A financial plan that is flexible, is easy to follow and is easily achievable should allow you to have fun too!

Reason 4: Fear of Failure

This may seem like a weird reason for financial plan aversion, but a lot of people are afraid to set goals. As they don’t want to be seen as a failure if they don’t achieve them. However, without clear goals it’s hard to plan and even harder to achieve.

Please don’t let fear hold you back. I challenge you to face your fear. You can do this by taking small steps. Little steps are a lot less scary than trying to tackle a goal in one giant leap. You will see in the financial plan worksheet, available on the Planning Worksheets page, I ask that you break your long-term goals into a series of shorter stages.

Reason 5: Excuses, excuses…

If you were to ask someone why they don’t have a financial plan, why they’re not planning for their retirement, why they don’t have a will, etc, you will no doubt hear a lot of different excuses. I reckon that these excuses are a ‘smoke screen’, or a symptom, for some greater underlying reason.

If you do not have clear goals and a financial plan to achieve them then I strongly recommend that you ask yourself why. Don’t be satisfied with your first answer though. Keeping asking "why" five times - “why did I give that answer?”, “why is that?”, etc. If you ask “Why?” five times then you will get to the real reason for your reluctance. You now have a solid reason that you can tackle and work around. You will be surprised at the progress you can then make.

A Round TUIT

Now, be honest with yourself - do you reasonate with any of the above? If so, don't delay. Set you financial plan today!

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