Do You Need a Financial Plan?

For the regular readers of my blog you know that I am a big believer in planning.  I believe in having written goals and developing a plan to work towards accomplishing them.  Big business uses strategic plans, communities develop land use plans, and athletes develop plans for their season.  So why, according to a recent Gallup survey, do only 38% of people in the US have a written out financial plan.

I was actually surprised the number was that high since more than 90% of prospects I meet with don’t have any formal plans developed for their finances when we begin talking.  I also think the results would be different if they asked this question: Do you have a written financial plan that has been updated in the last year.  If they asked that question I believe the number would probably be dramatically lower.

So what should you do about it?

If you are in the 38% congratulations on taking the first step.  Now it’s time for the real work to begin.  Is your plan being regularly monitored and reviewed?  Are you on track to accomplish the goals that you wrote down in your plan?  Have conditions changed that are affecting your progress?  Are you achieving the market returns or income necessary to reach your goals?  Have your expenses changed?  Have the kids moved back home?

I throw all of those questions out to show that you having a written plan is simply not enough.  You have to review it and review it regularly.

So what do you do if you are part of the 62% that don’t have a plan?  Well by reading this blog you are taking the first baby step.  You are thinking about your financial goals.  That’s a small step in the right direction.  Let’s take a minute to talk about the steps it takes to create a written financial plan.  A formal financial plan contains 6 components: Cash management (ie what you spend, what you save, budgeting), Risk Management (the fancy words for insurance), Investment Planning, Tax Planning, Retirement Planning and Legacy Planning (or estate planning if you prefer).

Getting organized in all 6 areas can be very daunting on your own.  I don’t blame people for avoiding their finances it can be scary.  Lord knows I have made tons of mistakes with my own finances.  Ask me about my experience as a landlord sometime.  That is why it’s important to hire an unbiased objective professional that can help guide you through the whole process.

I warn everyone on the front end.  This is not a quick process.  It can take 8-10 hours of your time but I always ask them this question.

If you could have a better understanding of your finances would it be worth investing 8-10 hours of your time? 

If you are looking to get a better handle of your finances or haven’t reviewed your financial plan in a few years I am here to help.  Give me a call in the office (336) 310-4233 or shoot me an email so we can schedule a time to talk about your goals and my process.

Wishing you a financially brighter tomorrow,


Peter Huminski AWMA

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.