Financial planning is a way of preparing your finances for the future, which is unpredictable. There are 2 routes to creating a financial plan: a full-blown financial plan that you establish with a licensed Financial Advisor or a spending plan that you build yourself (if you need help building on, click here.)
Either way, the goal is to save more money, pay off your debt, and invest for your future so you can build long-term, sustainable wealth.
2020 has been different than anyone could have ever imagined. We’ve faced a global pandemic, civil unrest, a national recession, nationwide division… the list goes on. On top of that, most of us are riddled with anxiety over the uncertainty the future holds, and the idea of financial planning on top of it all is stressful.
Whether it be the potential to lose our jobs, the looming recession (or even depression), income uncertainty, or some combination of the three, 2020 has taught us one thing: financial security is everything. And that is why you NEED to be financial planning!
Most of us think that financial security is a number; whether it be an age, an amount, or a date. I’m here to tell you that it’s not. Financial security is a feeling, and it comes from having a plan in place.
When you know where your money is going, you can make confident financial decisions that make you feel secure. Whether it be a decision to spend money, a decision to make money, or a decision to save money; a plan gives you guidance, perspective, and certainty.
2021 is the year of financial planning. We may not know exactly what to expect, but we now know from experience to expect the unexpected.
Here is why you NEED to plan out your finances for 2021:
1. A financial plan gives you security + confidence
One of the non-monetary benefits of having a financial plan is the comfort that comes along with it. When you know where your money is going and how it’s benefitting you, you can actually show up BETTER in other areas of your life. You aren’t plagued with worry or stress around covering your bills or reaching your goals, and you’re about to reduce the amount of guilt you have with spending money.
Financial planning goes so far beyond the tactical and tangible benefits. It allows you to be a better version of you, because you aren’t worried about money. Money permeates all areas of our lives, whether we realize it or not!
2. It can help you double your savings
With a financial plan in 2020, I was able to more than double my net worth and reach over $100K in savings. I’m only 25. That’s the power of having a plan in place. You have total control over where your money goes, and you can make saving a priority. When you plan out your finances you can see how much money you spend on non-essentials and evaluate if they are bringing value into your life or not. If not, you can proactively redirect that money into savings.
People who have a plan in place for their money report being able to save twice as much compared to non-planners. So if you’ve been unhappy with your financial progress, a plan could make all the difference.
3. It can help you live more comfortably
Creating a financial plan guides you in making the most of what you have. A plan allows your money to work for you, rather than you being a slave to your income. When you have a plan, you can focus on highlighting what you DO have and what you actually want, and ensure that your hard-earned dollars are spent there. Without a plan, you probably find yourself bumming out pretty often about all of the things you DON’T have, can’t have, or never will have.
Now more than ever it’s important to have a financial plan in place. With the uncertainty we’ve been exposed to over the last year, having your finances organized and planned will give you incredible peace of mind, and allow you to continue to make financial progress despite external economic circumstances.
If you’ve been looking for a sign to plan your finances, this is it. Make 2021 your best financial year yet and GET PLANNING!