5 Financial Planning Myths

5 Financial Planning Myths

30 November 2018 - posted in Lifestyle and Pre-Retirees and Retirees by Brenton Miegel

It’s a fact that only about 20% of the Australian population seek the advice of a professional financial planner!

Part of the issue, I’m certain, is the people have the wrong idea about what we do and how we do it.  A professional financial planner is not an accountant, and we are not here to just help those who have significant wealth.  Misconceptions like these often prevent people who would benefit most from financial planning from ever considering using us.

Here’s 5 of the more common myths that may stop you from seeking the advice of a professional financial planner:

Financial Planning is only for the wealthy:

Wealthy people are just that because they had planned for it! There are many stories about people who have accumulated $1 million or more over their working lives; achieved with careful planning and saving.  They had a goal and worked towards it.  Financial planning can be beneficial for everyone as it can help to balance living for today and preparing for the future.

I will inherit from my parents (or relatives) and so I don’t have to worry about a financial plan!

It’s great that you may be eventually receiving an inheritance, but it does not mean that you should not plan.  Let’s face it, you won’t know precisely when the inheritance will come along and how much you’ll get for that matter!  Having a solid plan in place, irrespective of any potential inheritance, is critical so that you are not caught unprepared. It’s also important to know how the inheritance may be received – will it be cash, a property or shares for example.

A financial planner will simply say “stop spending!”

It’s a fairly common concern – a financial planner will say “no more eating out” or “no more vacations” or “no more shopping trips” ………. No more fun!! Nothing could be further from the truth!  A professional financial planner will assist you to understand what you really want and show you how to achieve it. Financial Planning enables you to think outside the square – e.g.: you love dining out and gourmet food; rather than eating out all the time, try cooking gourmet at home to save money and build culinary skills at the same time. Indulge your passion, just a little differently.  A professional financial planner doesn’t want to limit you, we want to enhance those things in life that are important to you – with an end goal in mind!

I’ve got years until retirement

In my experience, you can never start planning for retirement too early! Starting early, and with smaller amounts (less noticeable from your pay packet perhaps) enables you to use the power of compounding.  The longer you wait, the harder you’ll need to save to achieve that retirement goal. Remember that ‘saving’ can also mean reducing the mortgage faster – it’s not just about accumulating superannuation or a bank account.  Work/life/wealth balance is just so important and achieving your goals can be made easier with the help of a professional financial planner.

It’s too expensive!

Many people miss out of the benefits of financial planner because there is a perception that it is too expensive.  Financial planning does not have to be a burden, and in fact it can ultimately save you money.  A comprehensive financial plan will cover your entire financial picture and will identify areas that you can save money, reduce debt, reduce tax and build wealth.

Financial planning can help protect you from financial loss by ensuring you have adequate protection in the event of significant issues arising.  This may be in the event of accident or illness, or even a lawsuit.  Working with a professional financial planner can also improve the long-term growth of your investments by outlining your goals and your risk tolerance and then matching up your portfolio with your timeline.

In short, the value of the planning process far outweighs the cost of the service.


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