7 Financial Planning Myths - BUSTED: Here's what you got wrong about financial planning
There is a myriad of myths floating around on financial planning and we have gathered a handful of statements we often hear from people.
To set the record straight and debunk major myths, we have packed this blog with some eye-opening insights and information.
Financial Planning has often become confused, misconstrued, and mistaken for almost everything except what it truly stands for.
There are all kinds of people.
Those who endorse financial planning as well as those who don't.
Those who actively seek financial planning and those who evidently evade it.
Those ready to sink their teeth into financial planning or those who don't care even one bit.
What exactly is financial planning, anyway?
Ah, well! We'll clarify that in the end. Our job, for now, is to bust all myths forever.
Here's what people believe about financial planning and why it's so untrue.
Myth #1: "Isn't financial planning only for the rich?"
Many people don't feel the need for financial planning.
When we enquired why they feel so, this is what some of them had to say.
"I don't make a ton of money, what would financial planning fetch me?"
They have somehow, from somewhere received the notion that financial planning is only for the rich.
However, this is far from reality.
Financial planning is a methodology and a powerful tool that is applicable to goals of all sizes. .
Be it a small goal of a short vacation or a big goal of buying a house, planning can dramatically improve your financial success rate while saving you a ton of money.
There are millionaires and have a miserable financial life because of a lack of a proper financial plan and mindset.
It's equally likely to find an average Joe with an incredibly comfortable financial life just because he/she has a perfectly customized financial plan in place
Financial planning is NOT only for the rich. Financial planning is for everyone. In fact, smart, effective, and strategic financial planning can make you richer.
Myth #2: "I can do it all on my own."
There are a few who believe that they can do it all by themselves.
An online platform for financial planning?
Whatever! It's fine. I know how to do it.
And here's how they do it!
They sit down on a lazy weekend and enter their monthly or quarterly expenses in an Excel sheet and calculate their future costs, EMIs, etc.
If that's your idea of financial planning, well, then that isn't really financial planning.
As a professional, you are an expert in your field but not in financial planning or investments.
Obviously, because you haven't invested years studying and researching financial modeling and analysis.
Financial Planning takes a comprehensive and effective methodology. That is not something you can do on your own.
There are numerous aspects that you don't take into consideration while doing it on your own.
Be it, market volatility, inflation, cash flow modeling, debt management, strategies, a clearly defined methodology, and so on.
Hence, it can never be as comprehensive or effective as it would have been if done using the right tools and methodology.
Let's try and understand this with an analogy.
Look at financial planning like a fitness routine.
Some workout every day diligently for four years yet struggle to get results.
While some people see rapid transformations in their body just within 6 months because they hire the right trainer.
Why is it so? When you work with the right expert, you can identify all the mistakes you are making and smart ways to achieve your goals faster.
Similarly, you can manage your finances on your own but you are bound to hit a glass ceiling. If you instead use the right financial planning tool with an efficient methodology, you can easily make progress in your finances.
You may say not everyone can afford an outrageous fee for the perfect fitness coach who customizes a routine for you exclusively.
The same is the case with traditional financial planners that charge not less than Rs. 30,000 per session and it's an ordeal to find the perfect one.
MoneyPlanned is solving this and much more.
At MoneyPlanned, we are refining and re-defining financial planning for today's day and age with a seamless user experience and a super-efficient financial planning methodology.
You get a more in-depth financial plan from the comfort of your home without having to deal with complicated 20-page financial reports and expensive financial advisors while your financial details are fully private to you.
MoneyPlanned is a powerful tool that helps you plan, execute, and track your goals before effortlessly.
All this for the price of lunch. No, we aren't kidding! Check out our plans here!
Not everyone can afford a fitness coach, but if you can comfortably afford a lunch party, you can afford to plan your finances too.
Myth #3: "I think I already planned my finances."
There are those who deem themselves or their dear uncle or a far-relative their financial guru or personal Yoda.
But what's wrong with continuing to follow your own methods or those suggested by your uncle?
The problem is that you will continue to make the same mistakes.
You will continue to be a victim of the same limitations.
Chances are you will never be aware of your mistakes and limitations until you get a fresh and accurate perspective on your plans.
Using a financial planning tool pays off for sure. In most cases, you might see the ROI right away.
Maybe you will discover you can pay off your home loan faster without any comprise on your current lifestyle.
Or you might discover that you can reach your retirement easily on a smaller SIP and have more money to do more things.
All of these seem small at first but trust us when we say that such smart and accurate recommendations will eventually result in huge returns on your finances.
Myth #4: "I invested in Insurance and Mutual Funds. What do I plan more?"
Most people think that financial planning is synonymous with Investments and Insurances.
This is the stereotype that has been existing among our families, colleagues, friends, and the general populace.
The answer however is pretty straightforward.
It's not 'Plan = Invest'. You don't 'Plan or Invest' either.
The right way is to 'Plan and then Invest'.
That's investment planning which is a core component of financial planning. In all cases, it is important to have a plan in place before proceeding with investing in any financial product.
Nothing reaps greater returns than an effective financial plan.
Financial planning is about YOUR goals and dreams.
What do you want to achieve with your money?
Buying your dream home, or retiring in comfort, or paying for a great education for your kids?
What is the best way you can achieve your goals?
Most people jump right in to invest in insurances and mutual funds without having an answer to any of these.
Financial Planning considers debt management, cash flow management, goal prioritization, overall goal portfolio optimization, timeframe for goal completion, etc apart from the last actionable step viz. making an investment.
Your financial life is not just about one goal or another. It's about how you can achieve optimization with all your goals put together.
Any investment or insurance for any life goal is worthwhile only after you know how it fits in the overall scheme of things.
There are many investment and insurance agents out there with the sole aim of selling their products and earning their commissions.
Yet most of us start and end our entire financial planning journey with just investments without a plan while abandoning a comprehensively planned financial life.
Investment planning is a subset of financial planning. A plan however is imperative for optimization and success.
Myth #5: "God has been kind. I am blessed."
You may be earning more than enough for yourself and your family.
You may have inherited a lot of property and wealth.
You may have never had any financial difficulty ever.
If that's the case with you, it is no surprise that financial planning has never crossed your mind.
Why not make your already blessed and abundant financial life even better, or the best that it can be?
With financial planning, you can achieve all your big goals with ease, make more room for the fun stuff in your life, and consistently achieve all your goals with ease.
Fulfillment in life is a wonderful thing. But so is a quest to make it the best it can be which can be achieved with planning.
Myth #6: "I don't want to pay for a financial planning service."
Why pay for planning when the aim is growing money? they say.
Some think it's absolutely unnecessary to pay even a single penny that doesn't grow by 10x instantly.
Some enjoy free lunches only.
Here's the truth.
Financial planning is one of the best investments you can make in your life.
For example, investing just ₹600 per month to plan your finances on MoneyPlanned could save you up to ₹20 Lakhs over 10 years on a single goal like Buying a Home.
Apart from this, you could plan more goals and save a ton of money for yourself.
You can reap tremendous returns just by the effective use of debt management and cash flow management.
Apart from the purely monetary returns, you get even more amazing qualitative benefits like the elimination of financial stress, confidence, and peace about your financial future.
You will know exactly what financial decisions to take at every point in your life, and you will achieve your goals with up to 300% more success rate than an average person.
7. "I will do it later when the time is right."
It may be sheer laziness.
It may be habitual procrastination or evasion.
Whatever the reason may be, we tend to postpone planning our finances.
Because it requires you to take action. It requires you to start thinking about your goals in life.
Financial planning is actually a lot like a fitness workout. The best time to get started is right NOW.
Procrastination will only creep into your implementation while drastically reducing your success rate.
Your current financial situation may not permit you to start implementing your plans. However, it's always a good idea to start small for your long-term goals and have a plan in place.
Often times it turns out that your goals are easier to achieve than you imagine. All it takes is a detailed, comprehensive, and effective financial plan.
Much to your surprise, you may figure out that your goals could be achieved with no compromise in your current lifestyle.
That's the power of a well-defined and well-structured methodology to plan your finances.
As you keep delaying, you will lose out on the power of compounding.
Especially in the long-term goals like buying a home, investing for a child's education, or retirement.
A 3-year delay in starting to plan and invest for your retirement could decrease your retirement corpus by 30%.
Most myths around financial planning are due to a lack of awareness. Financial Planning is for everyone but it isn't something one can do on their own without any aid.
Investment planning is a subset of financial planning but not the same as it. An investment in financial planning pays great returns.
You will lose out on the power of compounding as you procrastinate financial planning. The best time to start planning is NOW.
In the space of financial planning that is clogged by archaic user experiences, lengthy 20-page reports, and expensive (at times, ineffective) advisors, MoneyPlanned is creating something new, unique, unprecedented.
Through deep reinvention of the process, we believe in delivering delightful experiences to our customers by making financial goals easy and fun.
We brought innovative technology, comprehensive methodology, and delightful design together to help you plan, execute, and track all your financial goals easily.
Here's financial planning refined and re-defined by MoneyPlanned.
Disclaimer: This is not a universally acceptable university textbook definition. It is what MoneyPlanned does to make our user's life happier and easier.