7 Reasons Why You Should Have A Financial Plan


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Almost all, if not all people with a lot of money have financial plans and it is also a common assumption that financial plans are only for the rich. However, financial plans have proven to also benefit people at all income levels and even used to move income brackets.

Why You Need A Financial Plan

So why not have your own financial plan? Here are the 7 main reasons why I think it is necessary to develop a plan and stick to it.

Helps You Determine Your Financial Goals

A financial planner will start off by asking you what your financial goals are – its mainly a plan for your story and purpose. It enables you to plan for every stage of your life and live out the best version of your life at every stage of life. “A goal without a plan is just a wish,” – Antoine De Saint-Exupery, so stop wishing and get planning.

[bctt tweet=”A Financial Plan enables you to plan every stage of your life & live out the best version.” username=”beyondsixzeros”]

Ensures You Save Enough

After quickly jotting down your financial goals, the financial planner will look to see how you can get there – how much to save, what types of investments to make. It is at this point that a financial planner does a cost-benefit analysis to see whether your goals are realistic given your current financial standing. Most people have more financial goals than financial resources. But, do not be discouraged because usually the only problem is the time-factor not the goal itself. Usually goals like mortgage, retirement, children education or paying debt, usually take years to accomplish – so the sooner you start, the better off you will be.

Helps Determine Your Investment Allocation

Your financial plan will prevent you from making any financial mistakes when deciding what sort of investments to make. For instance, you got a loan from a bank at 18% interest rate, and your fixed deposit at the same bank is 5% – does that seem like a wise investment to you when its barely raking anything near 5%.

Your financial plan enables you to see the big picture, the flaws and also help you maximize your investments – which can easily be fixed. It is important to note that, most successful people have been making very smart financial decisions all their life – so the sooner you start making wise decisions, the sooner you get to where you want to be.

[bctt tweet=”The time-factor is usually the only hindrance to achieving your financial goals – start early. ” username=”beyondsixzeros”]

Helps You Measure Your Progress

Life milestones need to be set within your goals and investments made to meet those milestones. Progress checks are necessary to ensure that you are well on your way to meeting these goals in a timely manner. For instance, investing in your children college fund to mature at the time they are likely to join university is extremely important. Also, ensuring you save a certain amount at the end of each year to meet that milestone is a measurable outcome.

Helps You Identify Risks

One important aspect of a financial plan is looking at risk capacity. Accessing how much risk you can accommodate or what sort of dangers you are likely to face down the road is an important part of planning. Financial plans can help you identify those risks and plan accordingly. For instance, imagine taking a mortgage without a proper plan as to how you intend to contribute towards its payment and wind up being a slave to the bank while your family takes a backseat in fear of losing your home. “The wealth which enslaves the owner isn’t wealth” – African Proverb.

Helps you Build Wealth

Real Wealth. On knowing what your net worth is, it is easy to know what to build or add to your wealth portfolio to increase your net worth. Do not wait until it’s too late to start planning – life is too short to not plan.

[bctt tweet=”A financial plan enables you to see the big picture, the flaws and helps you maximize. ” username=”beyondsixzeros”]

Helps You Live More Confidently and Comfortably

Being on top of your financial situation enables you to live more comfortably and confidently knowing that you are covered. Your life is more in control and things are on track, a great way to reduce stress in your life.

Bottom Line

What are some of the other benefits of financial planning? We’d love to get your thoughts  – feel free to leave a comment below.

Happy Planning!

Meanwhile, You can click on the following links to read more financial planning and building wealth:

Disclosure: This information is provided to you as a resource for informational purposes only. It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.

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Irene Makanga
Irene has an MBA in Finance and is an avid businesswoman, passionate about financial literacy.


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