Are You Among the 34% Who Have No Financial Plans?
A study that Harris Poll conducted for Northwestern Mutual showed that 58% of Americans believe their financial planning efforts need improvement and that 34% have done nothing at all to plan for their financial futures. The report is based on a survey of 5,474 American adults.
The major stumbling block is that these Americans have no set priorities for their financial lives. They have to start somewhere, and they should not wait until they are 60 years old and in panic mode. These people need to consider their goals—whether they want to pay off debt, save for retirement, or prepare for unplanned events such as a possible loss of employment, an illness, or an emergency. The Harris Poll survey also found that, when it comes to money matters, unplanned financial emergencies are what Americans fear most. In addition, many of those who believe their financial-planning efforts need improvement would be most motivated to take action if they received an unlikely “cash windfall.”
Some of the more reasonable excuses are that people are just too busy and that they have very little time to devote to financial planning. Do these statements ring true for you? “I need to spend my time on my taxes this month.” “It’s summer, and the kids (or grandkids) are on school vacation.” “It’s the holiday season; I’ll get to it after the new year.” Of course, these sound like legitimate reasons for putting off long-term financial decisions and planning. However, many people fear that they will face some very stressful realities if they begin their financial planning. For instance, they fear discovering that they can’t retire when they had planned to.
It takes a plan to be ready for retirement.
Some people work more than 40 hours per week; others have two jobs or run a small business that depends on their leadership 24/7. These people can’t take the time to work on developing a financial plan. Many people are diligent but still live paycheck to paycheck and are buried in debt. Why? They have no financial plan.
Unfortunately, by the time people finally realize they have to create a financial plan or that they should hire professional help, they already have developed a fatalistic attitude: “It’s too late to start now; I can’t deal with all of the details.” However, making any decision while following a plan is better than making no decisions at all and just hoping for the best. Some people mistakenly believe that they must have wealth to qualify for working with an advisor to create a financial plan. This is a backwards way of looking at it, as any effective and personalized financial plan will pave the way to potential wealth. A skilled, fee-only financial advisor will educate each client before designing a financial plan. Many people need a step-by-step blueprint to help them navigate through the life’s choppy waters and transitions. Advisors will also help these people to build confidence in their financial futures and will strive to achieve their goals. A financial plan is the guide that people need to steer themselves in the right direction.
A fee-only advisor will help you to identify important financial goals, which are at the heart of financial plans. This includes (but is not limited to) goals in the following areas:
- Savings and investment
- Education funding for children
- Survivors’ income for spouse and children
- Estate planning
- Charitable giving
- Income-tax reduction
- Debt reduction
If you are one of the 34% of Americans who have no financial plan, here are the three most important questions to ask yourself:
- What are my long-term financial goals?
- Financially, where am I now, and where will I likely be in the future?
- What do I need to do to achieve my financial goals?
Once you have asked these questions, take action by hiring a fee-only advisor to help you proceed with your financial goals.
