Common Misconceptions People Have About Financial Planning
The sheer abundance of financial resources and advice available to people in this digital age poses a unique challenge. While the abundance of information is excellent, not everything can be trusted. When you take into consideration the fact that over the years, the financial industry as a whole has been plagued with half-truths, lies, and myths, it makes knowing whom to trust or which information you can bank on all the more difficult.
In general, people have many misconceptions when it comes to financial planning. While some think that they don’t need a financial planner, others believe that their income is not significant enough even to warrant some kind of financial planning. Such misconceptions often prevent people from even thinking that they genuinely need financial planning as a service.
To help you buy into half-baked truths about financial planning that could prove to be costly, RGE & Associates has put together a list of the most common misconceptions people have about financial planning.
1. Financial Planning is about budgeting and cutting back
While there is definitely some overlap between cutting back and having a financial plan, you need to ensure you’re not confused with the two. A budget is designed with the purpose of tracking your spending and savings patterns and making you more efficient with your personal cash flow. On the other hand, financial planning encompasses all of the areas of your financial journey. Your financial plan will guide you to make seemingly tough financial decisions and give you clarity about how you can better manage your finances with confidence.
2. Financial Planning is for people who are wealthier than me
Thanks to technology and transparency in the financial industry, financial planning is no longer reserved only for the rich. On the contrary, this myth is what keeps people from getting started with financial planning in the first place and retiring early. You must remember that in any investment or savings plan, everyone starts with zero until they make their first investment.
3. A Financial Planner is someone who handles my investments
While some financial planners also function as investment managers, the two roles may not always overlap. Investment managers focus on investing your money based on a specific objective for the strategy they manage. While some investment managers take into consideration broader financial implications, others may not look into tax aspects, such as capital gains or other critical variables. Financial planners consider the whole picture and develop a plan that is tailored to your risk profile and situation.
4. I can handle my own money; I don’t need Financial Planning
Having a financial plan is no longer an option; it’s a must. Your financial plan is the ultimate tool that will help you steer towards future financial success. Without proper financial planning, navigating your finances can feel cumbersome. Your financial plan simplifies the process by keeping you on track and guiding you to the next steps you need to be taking.
5. Having a Financial Plan isn’t going to make a difference to my situation
Comprehensive financial planning with a competent financial planner will help you consciously navigate your financial future and help you reach your goals as well as prepare you to deal with inevitable financial surprises better. Working with a certified financial planner to start with your financial planning process is committing to your future.
To steer clear of these myths and start with your financial planning process, reach out to RGE & Associates - St. Catharines CFO Services, Personal Financial Planning Services & Bookkeeping. Our professionals at RGE & Associates Inc. are helping families and businesses succeed in their financial goals. We are experts in personal financial planning and business growth strategies; we specialize in finding the best solutions to meet your financial goals.
RGE & Associates is here to help bridge the gap between having an average company and owning a growth company. Our team of professionals provides fundamental accounting services and strategic plans to redefine your business for success.