Investing · June 15, 2020

Designing Your Future: Why Financial Planning Is Important

We all wake up each day in pursuit of a better path through the world for ourselves and our loved ones. We do our best to plan for the future—but often, the things that keep us up at night are those that are beyond our control.

That's why financial planning is important. No matter your income level or stage of life, a sound financial plan can help minimize the impact of unpredictable events.


Decrease stress through preparation

An ounce of prevention is worth a pound of cure, the old adage goes. Financial planning is, in part, prevention. By establishing a financial plan—what you have, what you want to have (or fund), how you'll get there and how you'll weather the storms along the way—you can make the unknowns feel less scary.

When your stress is high, it can impact your job performance and limit the time you have to spend with those who matter most, reducing your quality of life. The greatest financial stresses often stem from not knowing where the money will come from to fund one of life's curveballs.

Creating a financial plan is one way you can help lower this stress so you can focus on what matters most. By plotting out where you're headed and creating savings and investment plans to help you reach your goals, you'll be building the resilience you need to face the unexpected. You'll also know what it's going to take to help you reach key goals like buying a home, paying for college or retiring to the location of your dreams.

Measure your progress

One of the reasons why financial planning is important is that it provides measurability. Establishing a plan empowers you to check in periodically and see how you're doing.

If you regularly review your plan, you can make adjustments to accelerate your goals and allow room for new ones. For example, a new child added to your family might mean creating a new college savings plan and additional life insurance needs. An inheritance could mean paying off your mortgage or other debts early so you can shift those resources to funding a different goal. It can also mean looking at your life insurance needs as you take personal stock of your own mortality. Measuring progress can also help you catch shortfalls before it's too late to make up the difference.

You might also benefit from the impartial advice of a third party, like a trusted financial advisor. They can often bring an impartial and objective set of eyes to your unique situation. From there, they can offer advice, make investment recommendations and see around corners that your emotions keep from sight.

Protect your goals and your loved ones

Financial planning gives you the ability to protect what you cherish most in life, taking into consideration a wide range of possibilities. These might include:

  • The loss of a spouse's income
  • Sending children and grandchildren to college
  • Paying for long-term medical care
  • Creating secure income streams during your retirement
  • Creating an insurance plan to build a legacy for your family, no matter your income level

While a financial plan helps you fund the things you want and need, it's also a tool to protect you and your loved ones. By investing the time to create a financial plan, you can chart a path forward for the financial goals that mean the most to you. You may also unearth areas of your financial health you might not have realized you need to address. With a well-planned investment and savings strategy, you and your family can have a firm financial foundation that stands against life's strongest storms.

Most importantly, financial planning isn't something you have to do alone. Don't be shy about asking for guidance from a trusted advisor. While you might find you still have to make financial decisions in a crunch, a solid financial plan can add structure and validation to those decisions when you do need to make them. You'll also have a partner in your corner so you don't have to make all those decisions alone.

Insights

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This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.