25th Nov 2019
Why bother getting a financial plan?
what does a financial plan actually look like?
The plan is the end result of a number of conversations and a fair amount of thinking and reflection. It is a structure that helps you reflect on your life and your aspirations. The process of writing down goals establishes commitment and forces you to call into question your values.
A great financial plan puts the control into your hands meaning you can make better decisions about your financial future.
Mark Victor Hansen says:
“By recording your dreams and goals on paper, you set in motion the process of becoming the person you want to be. Put your future in good hands – your own”
And what happens when there is no plan?
1. you miss your goals
If you don’t know what you want, you are unlikely to achieve it. This is the very reason that we say “a secure future doesn’t happen by accident”. Having a great retirement or being able to have the capital to start a business, happens through setting a goal and working towards it.
Planning early also gives you more flexibility when life throws complications your way.
Finally, the very act of planning and committing to goals increases your likelihood of achieving them. Success coaches recommend sharing your goals with at least three people because you are less likely to park your ambitions are more likely to realise them.
2. Not being able to provide for your family
We all want to be able to provide for our nearest and dearest, now and in the future.
When you start to accumulate wealth, you want to be able to pass it on in the future. Ensuring you have the right structures set up is part of your financial plan to ensure that your savings go to loved ones and not directly to your respective government.
3. Working for longer than you need to
This is often about retirement but for Superyacht crew it might be about when you can exit the industry.
Either way, you want to make sure you have the right number. The only way to understand where you are against your road map is to sit down and plan it out.
4. generic advice about products rather than solutions
You might decide that an offshore bank account is the best way to protect your savings and provide for your family in the future. This may well be the case, but how did you reach this conclusion?
Was it by searching for the benefits of offshore banking and deciding that you liked the sound of them? Or was it by planning out which elements of your lifestyle are important to you and searching for the solutions to provide it?
While the result may be the same for some, it is not true for everyone. You need to start with you and what you want and then search for the product or solution that provides it.
5. an investment strategy that isn’t fit for purpose
A written financial plan is a living document. It’s not a goal you set when you are twenty and keep in a drawer until you retire.
We all change over time.
Our situations evolve as do our priorities. So, if you aren’t adjusting your financial plan in relation to this, there is a risk that your lifestyle and income will no longer be aligned.
A good documented financial plan will help you to understand your current financial position and if you are in line to achieve your goals. While a plan put the odds in your favour, you will have to be the driving force in its implementation. This might mean you need to commit to a regular savings plan, start contributing to a pension or finally writing a will. Or it could even be as simple as reducing the risk profile of your investments as you reach retirement age to secure your lifestyle.