There’s a tendency for people to think that financial planning is only for millionaires and billionaires. That couldn’t be further from the truth. There are a lot of people that have changed their financial future through planning. As a matter of fact, you’re far more likely to retire comfortably if you have a financial plan than if you just conduct business as usual and assume everything will work out fine.

As with many other areas of life, things don’t always work out when you are not intentional about achieving your desired outcome. It’s been proven that having a financial plan is beneficial. In fact, working with a financial planner Melbourne can literally be a life-changing experience. Nevertheless, the average person does not have a financial plan. As it turns out, less than one-third of people in the workforce have a financial plan. That means people who have a steady income don’t usually plan how they will spend their earnings. Sometimes it’s simply a matter of not knowing where to start.

Unfortunately, not having a financial plan is one of the reasons why so many people are unable to live the life they want. While money is not always required to have fun, it’s often necessary for experiences that require travel. Let’s delve a bit deeper into reasons why you need a financial plan to secure your future.

  1. Starting Early Yields the Best Results

There’s often a misconception that people with financial wealth are smarter than everyone else, have a high-paying job or own a business. While that might be true in some cases, it usually isn’t. People that were not born into wealth and become millionaires usually have a financial plan. Their financial wealth is often because of good decisions, which includes always having a financial plan. Those that accumulate wealth early on are usually able to do so because they started early.

If you develop a financial plan in your twenties, there’s a good chance that you can reach millionaire status by your forties or fifties. Many have achieved that goal. The longer you wait to develop a financial plan, the harder it will become because you’ll need to invest a lot more money.

  1. Financial Planning Gives You Clarity

It’s easy to go through life assuming that everything will work out fine without actually having a plan. While it is important to be hopeful and optimistic, it’s also important to get clarity about what your future holds. By developing a plan, you can define your goals so that you know exactly what to expect in the future. Even if you fall short of saving the amount of money that you anticipated, you’ll be much better off than if you didn’t have a financial plan. You should always be able to communicate your financial goals because it allows you to be more intentional about achieving them.

  1. You Can Establish and Adjust the Timeline

Whenever you’re headed anywhere, there’s a possibility that something will happen and things will change. The same applies to financial plans. Once you establish a plan, there’s a chance that life circumstances will change. When this happens, you can take a look at where you are at the present time and make the necessary adjustments to your timeline. This can alleviate any fear that you might have about not being able to deal with emergencies that occur.

Life happens, but it doesn’t mean you give up, it just means your timeline will change. For example, most people include having children in their financial plan. However, if you have more children than anticipated, that will affect your long-term financial plan, especially if you have a college fund.

  1. You Can Cover All of Your Bases

A financial plan should be all encompassing. It should include a plan for major purchases, emergencies, education, insurance and retirement, among other categories. It should also include any other financial goals that you might have. For instance, if you want to travel around the world by the age of forty, that should be included in your financial plan. The possibilities are endless. Whatever you want to accomplish that requires money should be included in your plan.

  1. It Helps to Eliminate Unnecessary Spending

Most people buy more than they need because shopping has become a national pastime. Overconsumption is sometimes the result of good marketing. In other words, companies know how to get consumers to pull out their wallet, even when they don’t actually need the product or service. A financial plan will make you more aware of what you’re spending, which gives you a chance to determine whether or not you actually need to buy certain items.

Anytime you make intentional decisions, you put yourself in a better position than if you made decisions emotionally. Simply put, it’s better to buy what you need instead of what you want. Sometimes our desires are based on what everyone else has, which can be an emotional response to situations that results in financial ruin.

  1. It’s a Great Way to Measure Your Progress

There’s something exciting about being able to save money and enjoy the fruits of your hard work. By having a financial plan, you can see exactly how much money you have saved over a long period of time. It allows you to examine where you’ve been and where you’re going. This alone can create the momentum and excitement needed to keep saving and increasing your wealth.

  1. You Can Live a More Comfortable Life

Everyone wants to live a comfortable life, it’s human nature. The good news is that you don’t have to earn six figures to live comfortably. In fact, there are a lot of people that earn half that amount of money and live well without any financial concerns. They are able to achieve that goal by having a financial plan and sticking to it.