The Healthy Financial Life You Want Takes Planning

Comprehensive financial planning is something that too few of us think about. In Australia 8 out 10 people don’t get any financial advice at all and the picture is not much better in New Zealand where research has found that only a quarter of those nearing retirement have given their finances any great deal of thought. We seem to operate on a ‘wing and a prayer’ mentality when it comes to our personal finances.

One of the major obstacles to creating a financial plan isa lack of understanding of what a financial plan actually is, what it should include and how it can make your life so much easier.

Myths about financial planning

First of all, lets dispel some myths. An effective financial plan is:

XNOT about limiting your life in the expectation that you can spend up later. It’s about creating a healthy balance so you can live comfortably and confidently now and in the future.
XNOT just about retirement. Short-term goals matter too.
XNOT set in stone. Life changes, so there needs to be flexibility.
XNOT as time consuming as you would think. A little up-front effort goes a long way towards achieving the healthy financial life you want.

What is a financial plan all about?

Your personal financial plan will evaluate your current circumstances and explore your financial goals:

  • What have you got?
  • What do you want?And
  • What do you need to do to reach your goals?

That is what your plan is all about!!

What can you expect from your financial plan?

A comprehensive financial plan is a must to help you:

  1. Define your financial goals.

What do you want to achieve? Ironically, most people spend more time planning what they are going to do on their next holiday than thinking about and planning  for their financial goals. If you have a partner, sometimes doing this exercise alone is enough to get the two of you on the same page.

  1. See whether your goals are realistic, especially for your timeline.

After taking a close look at your goals, a financial plannerexplores how you can get there — how much do you need to save, what types of investments to make etc. A cost-benefit analysis will also help to determine whether your goals are realistic and attainable.  Most of us have more goals than financial resources and, depending on where you are at in your life journey, time may not be your friend.

  1. Bring your spending in line with your goals.

Once you know where you’re headed and how long it will take to get there, then you can look at your cash flow to find out if you’re spending more money than you’re taking in. If you have more money going out than coming in (negative cash flow) there’s no way you can meet your goals.

  1. Discover what money mistakes you’re currently making.

By lookingat not just your spending but your overall financial picture sometimes exposes mistakes — and easy fixes. “If I had known then what I know now, I could have saved a fortune” is something financial planners hear a lot from their new to financial planning clients.

  1. Find new ways to maximize your money.

Having an outside expert look at your financial picture might reveal opportunities to make or save money that you hadn’t thought of. You don’t know what you don’t know, so having an outside expert can broaden your options considerably.

  1. Identify risks you hadn’t thought of.

Part of a financial plan is looking at risks and your capacity to bear them. If you can’t afford the consequences should something go wrong (such as becoming ill or disabled, or an investment failing) an effective financial plan will put appropriate measures in place to protect you from such risks.

7.Measure your progress on your goals.

Once your plan is in place, you can set up measurable goals, such as regularly contributing a specific amount of money toward either savings or repaying debt over a period of time.  Then, at your annual review you can look and see ‘Did we do what we said we were going to do?’ If not, why not? Does the plan need to be amended?

  1. Become more confident with your money.

Greater confidence comes naturally when you know where you are heading and understand what you have to do to get there. Research has consistently shown that those with a financial plan are far more likely to feel very confident about managing money, savings and investments, than those who don’t. Having a financial plan in place goes a long way to making you feel like you have your life under control.

  1. Build your wealth.

Not surprisingly, research has found that those with a financial plan also have more money saved and are more likely to achieve their financial goals than those who don’t. An effective financial plan give people the knowledge necessary to make smarter financial choices.

  1. Live more comfortably.

Those with a plan are also twice as likely to say they are living comfortably than non-planners, even if they are earning less than those without a plan.A plan will help you focus on making the most of what you’ve got instead of lamenting what you don’t.


A financial plan is not a “quick fix” for financial woes. It is intended to be a long-term plan that takes into account short, medium and long-term goals. By engaging an expert financial adviser (i.e. an authorised financial adviser – AFA)you will save yourself the time and energy of sifting through a lot of advice, some of it potentially contradictory.

So, about that financial plan of yours?  How’s it progressing?