In this episode we discuss the importance of having a financial plan and how it can help you gain control of your personal finances. Having a well-built financial plan is more than just a 50 page document that shows you how much more you need to save to live a comfortable lifestyle in retirement, it is a roadmap that helps you accomplish your goals.
When you go on vacation, or travel in general, you usually plan out your trip in advance. We make a decision to either drive ourselves to the destination, or hire a professional to take us to where we want to go. A financial plan should act in the same manner. Unfortunately, most of us usually approach our personal financial planning the same way a person going on a road trip without a map does. You know the general direction, but without a map or some sort of instruction you just drive blindly toward your destination.
The issue with taking this approach to financial planning is that you may end up some place that you didn’t want to be without even knowing it, or just get completely lost along the way and never reach your personal goals. The solution to this is the same solution a traveler takes; load up your GPS and get a map. As this analogy relates to your personal finances, your map is the financial plan and your GPS is your financial advisor/planner.
Now imagine you are on that road trip traveling from Ohio to California and you hit a construction zone that costs you several hours to navigate around. If all you have is the map to help guide you then you may end up spending unnecessary time trying to figure out the most efficient route; however, if you have a GPS then it will automatically calculate the most efficient route for you to travel. When life throws you a curveball and you hit that detour, having a financial planner is a lot like having a GPS; they will help you get back on track in the most efficient manner possible.
So what gets in the way of everyone having a financial plan? From what I see more than anything else, it’s that people procrastinate. No one actually likes to think about their personal finances until it’s too late. The difference between you and the millionaire next door usually isn’t that they made way more money than you, but rather that they thought and planned for their future much earlier than everyone else.
So take a second and imagine where you want to be in 5, 10, 20 years and more. Dream with your spouse about everything you want to see happen in your life and take control of the factors you can. Time can either be your ally or your enemy, it just depends on when you want to take the leap to use it to help you accomplish your goals.