Personal financial planning is a worldwide approved system to obtain maximum results from limited sources. A better definition suitable to the financial planning is: “Developing and implementing an integrated, comprehensive plan to meet financial goal and preparing for financial emergencies.” There are several methods available to create financial planning for life. However, the most common practice is approaching certified, experience financial planners for the same. Most of the people don’t know the preparation of a fail proof, successful financial plan BY SELF is really simple once if they dedicated some time and effort to that.Sometime, intelligent people also commit mistake when it comes to their own financial planning. Here are the most common mistakes and myths in financial planning to avoid building a better plan for life that give required results all the time:
Financial Illiteracy Ignorance or illiteracy on financial planning generally took people away from planning finance for life. 90 out of 100 people may not have any kind of financial planning only because they are illiterate or ignorant in the area of financial planning! Interestingly, some of the highly successful CES’s of top companies are also belongs to this group. Getting help from experts like certified financial planners, searching and reading unlimited resources on financial planning from net, reading self-help resources and financial magazines would help people to come out of financial illiteracy darkness.
Setting Unrealistic Goals
Another reason of financial planning failure is comes from setting unrealistic financial goals. Such goals never come to reality and the effort puts on such would be certainly a waste. When identify financial goals, it should be realistic and achievable inside the knowledge and financial capacity of a person.
Taking Incorrect Financial Decisions
Whenever take any financial decision, one should consider the possible impact of that decision to another financial issues. Successful financial plan should have connected well with each financial factors involved in the process and ensure none of them affected with any financial decisions. For an example, withdrawing money from savings bank should not affect the monthly automatic contributions to any savings like mutual funds due to not having sufficient balance. Any financial plan that not have right connection to each points would certainly fail and no doubts on that.
Lack of Evaluation and Monitoring
Perfect financial plans can be also sometime failed by lack of monitoring and evaluation whenever needed. Highly depends of people to people and their style of planning, evaluation can be done periodically to check the health of present financial plan and status. Evaluation and monitoring certainly help to identify and correct any mistakes at the early stage before it comes to serious.
Waiting for the Time to Start Planning
Some people generally wait to welcome financial crisis or similar situations to plan and start financial plan. This is foolishness. Know that the financial planning is not only depends on money and status, but various factors connected to it. The best time to start financial plan is as soon as getting the first salary.
Thinking that Financial Planning Meant only Investing, Tax Planning or Retirement Planning
This is the biggest common mistake among people. Those who are unaware about what it meant by financial planning process would think that it is meant only investing, tax planning or planning for retirement. These three are the steps in financial planning but none of them can be considered as total financial planning. Recalling the sentence from the top paragraph, though financial planning we are “Developing and implementing an integrated, comprehensive plan to meet our all financial goals and preparing for financial emergency.” Thus, investing, tax planning or retirement planning is just a plan or methods to achieve any financial goals and cannot consider as financial planning itself.
Financial Planning is Only for Certain People or Status
Another biggest mistake is thinking the financial planning is only meant for riches who have money or those who are near to retirement. Even a school kid can build and have a financial plan for herself. It is for all those like to live a well disciplined life, but fulfill all the requirements.
Reluctant to Approach a Financial Adviser
People generally think that the involvement of a financial adviser should cut the freedom. It is just a myth. The job of any qualified financial planner is to assess, plan and execute the financial plan as per the requirements of her client along with ensuring the plan is suitable to the client needs. Having a successful financial adviser would ease your job by getting advices in time than cut any freedom.
As a reader, what do you think? If you have stuck with any of the above, it is the right time to re-think about the mistake to or proceed with right financial plan. Having a successful financial plan is the symbol of success by getting tight control on each areas of your life.
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