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Main Reasons People Avoid a Financial Plan

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What are the main reasons people avoid a financial plan? (And why you really do need one)

Many of us dream about living a better life, leaving the daily grind behind and planning for more leisure pursuits and free time to enjoy ourselves. What a lot of us forget is, that to do it, you need to have a decent financial plan. It’s estimated that only 25% of adults have one in place, and there are lots of reasons why people simply don’t bother…but that needs to change.

Should You Hire A Professional Financial Planner In Your Twenties

Only 24% of millennials demonstrate basic knowledge of proper financial literacy and planning, according to a study by the National Endowment for Financial Education. Financial planning is a road map that is meant to help you achieve economic goals more efficiently and timely. A financial advisor uses your monetary data to create projections on when and how you can accomplish your goals. They base these estimations on your income, inflation patterns, expenditure, among other assumptions. So, should you, as a youth, seek the services of a professional financial planner?

Finding the right planner

Before you even begin, take time to write down what you want to accomplish both in the short and long term. When ready, ask for recommendations from friends and family members who have similar goals and seem to be progressing well. You may also seek professional direction from your local bank or brokerage firms. Associations such as the Financial Planning Association, FPA, and the National Association of Personal Finance Advisors, NAPFA could come in handy as well.

Remember, the idea is to hire a certified planner who understands you and your goals. Of course, getting such a professional comes with a price. Most fee-only planners will charge anything between $1000 and $2000 for a detailed plan. Investment advisors ask for a certain percentage; around 1% of your invested assets. Always ask your potential planner to provide a disclosure document (ADV) which has details on all fee patterns and potential conflicts.

Prepare for life milestones

Unless you start planning now, you will not wake up one day and afford to purchase a home, as noted by InvestedWallet. At the very least, you need to save up for a down payment, clear up your debt and build up your credit score. Similarly, you need to save funds for your children’s education lest you won’t have it when the time comes.

Though it may not make a lot of sense to plan in your 20s because of unclear goals, it is vital. Furthermore, your financial plan is changeable and can be reviewed at any time as your life unfolds. Some major life milestones include purchasing a home, starting a family, and retirement. If you make these goals realistic and commit to following your financial plan, you have an excellent chance to always be ready at each stage of life.

“Regardless of your age or net worth, financial planning is important,” says Jeanette Brox, a senior financial consultant in Toronto. Hiring a financial planner is one of the best decisions a millennial could make. A good planner will advise you on how much you need to save or invest, among many other benefits. Make sure to meet your planner at least once a year and when you reach significant life events so that you keep your plan current and reasonable.

Article by: Cassidy Franklin

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