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5 Reasons to Have a Financial Plan

Doug Garrison, CFP, MBA - Senior Wealth Advisor



Right now, what do you care about most in life?

Your spouse? Grandchildren? A cause dear to your heart? A trip you long to take?

How do you show what it is that you care about?

Sometimes, money is the tool we use to express how much we care about someone or something.

We pay for college. We make loved ones the beneficiaries of IRAs and establish estate plans that will provide for our heirs after we pass on. We contribute to charities. We travel and create lasting memories.

A financial plan is a road-map to help you achieve what's important to you. It can determine the resources you'll need. Financial planning is a process built on what you care most about in life, and can lead you to find effective ways to express those feelings.

Here are five reasons why you should have a financial plan.

#1: Putting goals on paper forces you to make choices.

We live lives of limitations—we don't have all the money, all the energy, or all the time to do everything we might desire. Identifying specific objectives and putting a time table together to achieve them helps us prioritize. We have to choose, and in choosing, we focus our attention and bolster our commitment.

We live lives of limitations – in choosing, we focus attention and bolster commitment.


#2: Putting the numbers together may enable you to do more than what you may have thought possible.

You want to support a particular charity, but you may not have a clear understanding of just how generous you can be until you've created a robust financial plan. You're thinking about helping your kids with the down payment for their new home, but until you know how secure your retirement is, you hesitate in how much you can give them. Financial plans allow you to gauge the impact on your future of actions you might take today.

#3: Financial plans generate insight into your future, revealing opportunities you may not be aware of today.

A divorced client has a large IRA and a small taxable investment account. But she lives frugally, and is unlikely to spend all her Required Minimum Distributions (RMDs) once she begins them at age 72. Excess RMDs will go into her taxable investment account. Provided she lives into her eighties or nineties, she'll have a large estate to leave to her daughter. Until we did the plan for her, she planned on leaving her IRA to her child. Now, she sees benefit in using the IRA for charitable giving and for legacy gifts to her cousins. Tax-free assets from the investment account will benefit her daughter.

#4: Financial plans give you a sense of control and perspective.

Imagine taking a road trip without a map or a GPS and with no odometer to mark your progress. Yet that's what many people do with their financial lives. They're not sure where they're going, don't know if they'll arrive there, and keep trucking along as long as there is fuel (money) in the gas tank (bank account). Financial plans allow you to gauge your progress and assess the impact of unforeseen events.

A comprehensive plan can convey much more than just the numbers, giving insight into your future.


#5: A financial plan can reassure loved ones.

Those of us who monitor our family investments and make money-related decisions appreciate the elegance and accuracy that calculations and spreadsheets can provide. But many of us live with someone who just wants to know that "things will be okay."

For many years, I would talk to my wife about how we were doing financially, our net worth, and my Exxon salary. And most of that went in one ear and out the other. Finally, we became Investec Wealth Strategies clients. We reviewed our financial plan together. Geni turned to me and said, "Doug, for all these years you've been telling me that we'll be okay. Only now, do I believe we won't be eating Alpo dog food at age 85." A comprehensive plan can convey much more than just the numbers.

If you find these reasons compelling, or if you'd like to discuss what financial planning entails, give us a call. We take pride in preparing plans for our clients and accompanying them on their journey as they prioritize their goals, discover opportunities, gain a sense of control, and reassure their loved ones that things will be okay. It's never too late to begin.

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Disclaimer: The information provided here is general and intended as educational in nature. It is not intended nor should it be considered as tax, accounting, or legal advice. Investec Wealth Strategies and its advisors do not provide tax, accounting, or legal advice. We recommend you seek the counsel of your attorney, accountant or other qualified tax advisor concerning your situation.