A lot of individuals are working hard to save enough money so they can have a financially secure future. However, a lot of things can happen. It is best to have a financial plan ready so you can save the right amount of money and you will know how long it will take you to reach these goals. Here at Savvy Financials, we will be sharing information about why financial planning is important.

If you think this blog post is beneficial to you, make sure to keep reading below to find out. Hopefully, after reading you will be equipped with the knowledge, and you can understand the importance of having a financial plan. 

According to Schwab’s 2021 modern wealth survey, around 33% of Americans have a written financial plan. Almost half of the participants said they did not have enough money to make a financial plan. While some participants said they do not understand them or do not have enough time to spend developing a financial plan. 

What is financial planning?

Financial planning is a long-term process focused on managing your finances wisely so you can achieve your dreams and goals in life. This will help you have a stable way of dealing with any financial barriers that you will come across in different moments of your life. You must establish your goals first to have a reasonable financial plan to guide you. You will also need a financial planner to help you with the process. 

Check out the five reasons below why financial planning is important.

Increases Your Confidence

65% of the participants of the survey said that they feel they are financially stable because they have a written financial plan. It will give you the security of having financial goals that you can accomplish to achieve them.

A written financial plan will help you track your progress to fight any doubt or uncertainty regarding your financial decisions. You can work on your goals and overcome any obstacles and challenges that can affect your progress. 

Encourages Saving Habits

A financial plan can help you become diligent in saving money. Having not enough money is not a reason for having a financial plan. Planning can help you improve your saving and budgeting habits.

You can start with a small amount of money and work your way to fulfill your goals. Financial planning can also be beneficial to low-income households. They can work on their goals, and at the same time, they will have a way to gauge their progress so they will be successful in fulfilling their financial goals that will help secure their future. 

Allows You to Create an Investment Portfolio

Having a written financial plan will help you understand your financial capabilities. You will know your goals and the time you have to work to reach them, and you will also know the risks. Once you have a complete view of the financial plan, you will learn how to reach your goals one step at a time.

You will be equipped with knowledge on how to reach each goal according to your pace. You will also learn to save money; you have to set aside a portion of your income for short-term use or emergencies that can happen at any time.

You will also invest your money so you can set aside your finances for your long-term needs and allow it to grow substantially. The financial plan will work as a guide or roadmap to making smart decisions when investing. This will help prevent any careless decisions and help you avoid not having a sense of direction when reaching your financial goals. 

Savvy Financials - Cash Flow Forecasting: Utilizing advanced forecasting techniques to project future cash flows and assist in financial planning.

Helps Develop Healthy Money Habits 

Having a financial plan is not just solely focused on investing your money to make it grow. It also functions by helping improve your confidence, security, and quality of life. For example, having life insurance can help you have peace of mind that you will have an emergency fund in case something happens. A financial plan will help you improve your money habits and it will also help you develop good investing habits. 

Can Be Created According to Your Needs and Specifications

How do you approach life? Your personality type will dictate and influence your decisions, especially the financial aspects of your life. You can understand the kind of person you are concerning how you plan, which will help you follow the steps to reach your goals accordingly. A financial plan is unique for each individual; it can be developed according to your needs and personality. 

Why Hire a Professional Financial Planner?

A financial planner can help you create better financial decisions. They can help assess portfolio risk levels, improve saving habits, explain life insurance coverage, and prepare emergency savings. They can also help you work on your credit card balances. Family households that work with a financial planner can make significant financial decisions. 

A financial plan may seem like a burden, especially if you are still young and do not have enough money, to begin with. However, having a secure future is essential. It will provide a good foundation to build, understand, and achieve your financial goals. A written financial plan can help enhance your confidence and promote better financial behavior. The potential value of a financial plan can be different depending on the nature of the planning engagement. 

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We have more than 11 years of experience in the financial industry; we have the skills and training to help you with your financial needs. We also offer other financial services such as bookkeeping, consulting, financial advisory, payroll, and taxation. If you are interested to hire us for our services, please send us a message through our contact form here. What are you waiting for? Contact us today! Choose Savvy Financials, and we will be happy to help you with your financial planning needs.