It is not always acknowledged in financial planning that our relationship with money is laden with family baggage, regrets for missed opportunities and worries for the future. Denying the psychological and behavioural aspects of how we feel and make decisions about our finances is missing half the experience. Like watching an action movie without the background music.
As we enter into 2018, I wonder how many people will have some aspect of financial planning as one of their resolutions? And how many will find that some financial hang-up will prevent them from making progress?
I have put together a list of the 5 most common reasons people don’t pursue putting a financial plan in place. If you recognise yourself here, I would love to have a chat with you.
1. Don’t see the point of planning
They say: “What is the point of planning if we don’t know what is going to happen in the future?”
Some people are uncomfortable about putting a stake in the ground or setting targets when they feel that there are too many unknowns. Insecurity around employment, indecision around purchasing property or even the expectation of an inheritance have all been put forward as reasons why there is no point in looking too far ahead.
Some words of wisdom: “The trouble with not having a goal is that you can spend your life running up and down the field and never score.” —Bill Copeland
You can overcome this by getting used to uncertainty. The financial planning process deals with unknowns by using “guesses” or assumptions about what is most likely to happen. A good plan is flexible enough to allow for adjustments along the way as new information becomes available or if your priorities shift. Having a plan gives you short term focus and direction which is great for giving purpose to your efforts.
2. Lack of urgency
They say: “I mean to get on it, but it is not a priority for me right now”
Everyone seems to be busier and busier and it is easy to put a lower priority on anything that doesn’t have an immediate consequence.
Some words of wisdom: “A year from now you may wish you had started today.” ― Karen Lamb
Focusing on the cost to you of not getting organised is the way to combat this one. You may be missing opportunities such as investment returns or savings through reduced fees or taxes. You may be taking unnecessary risks such as if you are under-insured or inappropriately invested. Getting on to it now can have you better off in the long term.
They say: “I just have to tidy up a few things before I will be ready”
It is easy to feel as if you may have made mistakes or missed opportunities or that everyone else is doing better than you. You may fear that you will be judged or made to feel bad about your choices.
Some words of wisdom: “It doesn’t matter where you are coming from. All that matters is where you are going.” — Brian Tracy
The key to this is expecting and receiving a professional service. It is not an adviser’s place to hold an inquest into your past decisions. Our role is future facing where we use our expertise to help you find the best path forward.
4. Unsure about being able to change behaviour
They say: “I know I should be doing things differently, but I don’t know if I can”
The idea of sticking to a plan can be overwhelming for those who are spending too much, saving too little or who struggle with getting organised.
Some words of wisdom: “If you don’t make the time to work on creating the life that you want, you’re going to spend a lot of time dealing with a life you don’t want.” — Kevin Ngo
This is probably the hardest reason to overcome. Often what appears to be just plain irresponsible is actually a response to deep seated beliefs and unresolved issues. Work with your adviser to build a plan that is achievable for you. Be gentle on yourself, take baby steps and gain momentum as you work toward your goal.
5. Fear of finding out
They say: “I am having trouble gathering all the paperwork together”
Some people just cannot bear the idea of having it all added up and presented back to them. Denial has kicked in and they prefer to not know rather than have to face the truth about their situation.
Some words of wisdom: “If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them.” ― Henry David Thoreau
As you would expect, my advice here is to bite the bullet, grit your teeth and tough it out! Once you know, you can do something about it.
And in most cases it will not be as bad as you think!
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© Summation Strategies 2018.
Please note that all information provided is of a general nature and does not take into account your current financial situation, needs or objectives. Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. We recommend those seeking insurance or making an investment obtain financial advice specific to their situation and consider the Product Disclosure Statement prior to making any financial investment or insurance decision.