Have you ever heard that financial planning is only for wealthy people? Or that you don’t need to talk to a financial planner unless you have a lot of money to invest or are ready to retire?
If you’ve heard (or thought) these things, you’re not alone. These are some of the most common financial planning misconceptions. And that’s exactly what they are: misconceptions!
So, what’s the truth? Let’s take a look at some of these popular financial planning misconceptions and how they compare to reality. Once you know what to expect from financial planning, you can determine whether it’s something you’d like to pursue.
Financial Planning Misconception #1: It’s Just for Investments
Perhaps one of the most persistent myths about financial planning is that it’s solely focused on investment advice. But it’s simply not true!
While investment advice is part of financial planning, it’s just one aspect. Depending on your unique financial situation and goals, a financial planner may help you with
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- Budgeting
- Debt management
- Reaching a savings goal
- Buying a home
- Building an emergency fund
- Planning for a child’s college education
- Paying off student loans
- Insurance coverage
- Tax strategies
- Estate planning
- Retirement and investing
Effective financial planning is holistic — it includes every aspect of money management to help you reach your immediate and long-term financial goals.
Financial Planning Misconception #2: It’s Only for the Wealthy
Financial planning is usually associated with wealthy individuals, but you don’t have to be a millionaire to benefit from this support.
No matter how much net worth (or debt) you have, you can benefit from financial guidance. An experienced planner can help you gain a better understanding of your complete financial situation and help you develop a strategic plan to take control of your money.
Whether you’re independently wealthy, starting your first job, or living paycheck to paycheck, financial planning is available (and advantageous) to you.
Financial Planning Misconception #3: It’s Too Expensive
Because many people think financial planning is just for wealthy people, it makes sense that they also think this service costs a lot. But there are many different types of financial planning available, and they don’t all cost the same.
Personalized wealth management services may be costly, especially for clients with a high net worth. But there are many other services that are more affordable.
Depending on what sort of advice you want from a financial advisor, you may choose to work with a fee-only professional or a financial advisor who charges hourly rates.
And you don’t even have to commit to paying for ongoing financial guidance! Here at Guiding Wealth, we offer a cost-effective alternative: the one-time financial plan. For a single affordable fee, you can get a customized financial plan tailored to your goals.
Financial Planning Misconception #4: It’s Only for Retirement
Retirement can be complicated and overwhelming — only 23% of Americans have a written retirement plan. Many people initially contact a financial planner for guidance about retirement. An experienced planner can certainly help with that, but retirement planning doesn’t happen in a vacuum.
Even the best-laid plans sometimes go awry. Maybe you lose your job or have an unexpected medical emergency. Perhaps your family status changes, or you receive a large inheritance. All of these things can impact your retirement plans.
A financial planner can guide you through these situations and limit their impact on your retirement goals. Additionally, they can also help with near-term goals, like saving for your child’s college or reducing your debt.
Financial Planning Misconception #5: It’s for Older People
It’s never too early to take charge of your finances and start making decisions with your future in mind. In fact, getting financial guidance early in your career can make it easier to achieve your goals.
You don’t need to wait until you get married, have children, start a “real” job, or finish school to meet with a planner. Whether you want to start paying off student loans, save toward an emergency fund, start investing, or work on building up your credit score, a financial planner can help.
Financial Planning Misconception #6: You Don’t Need It
Knowing the basics of saving, spending, investing, and charitable giving is important. If you feel comfortable with your budget and aren’t facing financial challenges, you might think that a financial planner doesn’t have much to offer.
But you can still benefit from financial planning. An experienced planner can help you avoid mistakes and gain a different perspective on your money. They can offer strategies for complex financial decisions (like retirement or estate planning) and serve as a sounding board for any changes you might consider.
Financial Planning Misconception #7: It’s Only Helpful in an “Emergency”
A financial planner is a fantastic resource to help you overcome financial challenges like debt or cash flow problems. In fact, 18% of people say that they started working with a financial planner due to economic uncertainty. But financial advisors aren’t limited to “crisis response.”
If you contact a financial planner before things go wrong, they can help you prepare for those unexpected circumstances. They can help you get your finances on stable ground so you’re prepared to respond to any challenges that come along.
Financial Planning Misconception #8: You Have to Be On a Budget
Have you avoided meeting with a finance planner for fear that they’ll tell you to quit going out to dinner or enjoying your favorite hobby? It’s easy to think that a financial advisor will just focus on cutting expenses and focusing on saving or investing, but the truth is more complicated.
A good financial planner is willing to make those tough suggestions (like cutting your discretionary spending) when necessary. But they’ll only give you that advice if it’s in your best interest and aligned with your goals.
See What Financial Planning Can Offer You
Here at Guiding Wealth, we don’t offer cookie-cutter advice. We won’t tell you that all debt is bad or that you need to live a frugal life. We won’t say investing should be your top priority or force you to focus on retirement planning. Instead, we’ll help you define your financial priorities and make realistic plans to reach them.
Financial planning is for everyone! Whether you want to start your first savings account, learn what a Roth IRA is, save for college, or just feel more confident managing your money every day, we can help. Schedule a consultation online to get started.