The benefits of having a financial plan as an individual

What is the real benefit of having a financial plan? One obvious answer is that you will be better off financially in the long run, but that’s only part of the story.

In reality, a financial plan is often as close as many of us get to having a life plan.

A comprehensive financial plan isn’t built on money. It’s built on dreams and aspirations, on the goals you develop as an individual, even goals that aren’t fully defined.

A financial plan gives form to those dreams and goals. It helps you understand which ones are realistic, provides a roadmap to finance those goals, and ensures that you are aware of things you need to think about, even if you would rather not.

This includes:

• Protecting yourself and your family with insurance
• Achieving favourable but sensible tax outcomes
• Working towards a secure retirement
• Living within your means and avoiding spending more than you earn
• Converting business growth into personal wealth
• Making the most of investment opportunities.

Who benefits most?

There’s a common misconception that financial planning is only for individuals who have lots of money or who are nearing retirement.

But who benefits most from a financial plan? A 28-year-old earning $60,000 a year with $12,000 in super? Or a 62-year-old on $140,000 per annum, with $1.5 million in super and other investments?

Both, of course, will benefit from having a good financial plan, but arguably the younger individual, with decades to go until retirement and decades of life to be lived in the meantime, will reap the greater reward from getting into the financial planning habit now.

A living plan

A financial plan is based on your circumstances now.

It necessarily involves predictions and assumptions about the future, which may or may not turn out to be correct.

Goals will be achieved, desires may change, as will your ability to finance new goals. A financial plan isn’t cast in stone. It’s a living document, to be revised and updated whenever necessary.

Start now

Amongst the many golden rules of financial planning, perhaps the most important is ‘start now’. Another is ‘financial plans are for everyone’.

If you don’t yet have a financial plan there will never be a better time to get started than now.

And if it’s been a while since you last reviewed your financial plan, it’s almost certainly due for an update.

Let us help set you on the path to achieving your goals. To find out more about how a financial planner can help you, call us on (03) 9875 2900 or fill out the contact form below.