The abundance of financial resources and advice available to Americans, while great, comes with a challenge in itself—knowing which information you can trust.
When you pair that up with the fact that traditionally, the financial industry as a whole has been bombarded with untold truths, lies, and myths over several decades, it doesn’t make knowing who to trust or which information you can rely on any easier.
Long story short, it can somewhat difficult to really know what’s what. Being a consumer myself—of both financial content and products, I thought it would be helpful to break down some of the most common myths that our team at Savology sees and hears quite often which can lead households down a stray path.
Below are nine financial planning myths that you need to stop listening to.
Myth #1: You don’t need a financial plan
Truth: If you want to succeed and reach your goals, you absolutely need a financial plan.
Having a financial plan is no longer be a consideration, it’s a must. Your plan is the ultimate financial tool that will help you navigate towards future financial success.
Without a proper plan, navigating your finances can feel daunting. Your plan simplifies things by keeping you on track and showing you the next steps you need to be making.
Remember, planning to fail is failing to plan. When it comes to your finances, you’ll realize just how true this is.
Myth #2: A budget is a financial plan
Truth: A financial plan is much more than a budget, although spending and savings are one of the major areas included in your plan.
While there is certainly some overlap between a budget and a financial plan, make sure that you’re not confusing one for the other. A budget is specifically designed to track your spending and savings habits, helping you become more efficient with your personal cash flow.
A financial plan on the other hand, encompasses all of the areas of your financial life. From savings, spending, income, and housing, to insurance, estate plans, and retirement, your financial plan will pave the path to help with tough financial decisions and give you insight on how you can better manage each area with confidence.
Myth #3: My advisor will take care of everything
Truth: Your financial advisor, or financial planning platform, isn’t a magic solution.
While there are a lot of things your financial advisor or planning platform can provide, it’s not a be-all, end-all solution. At the end of the day, it’s entirely up to you to make sure that you’re taking action, improving your financial literacy, and taking those critical next steps you need to in order to inch closer to your goals.
When you start realizing that it starts and ends with you, it becomes even more of a motivating piece to take things into your own hands.
Myth #4: I can do it all on my own
Truth: It would be impossible to handle everything on your own.
While there are a lot of things you can and should take into your own hands, it would be unwise to think that you would be able to handle everything on your own when it comes to your personal finances.
At some point or another you will require some level of intervention and support from additional tools, services, and financial professionals.
Myth #5: Financial planning is too expensive
Truth: Financial planning can be expensive, however, that’s not always the case. In fact, with Savology, financial planning has never been more affordable.
Thanks to a combination of technology, industry-wide transparency, and new players, financial planning has become more accessible for the everyday household. Through proprietary technology, algorithms, and calculations, we’re able to provide accurate, personal, and effective financial planning in the most affordable way ever.
Myth #6: Financial planning is only for the wealthy
Truth: Financial planning is for everyone. If you earn an income, manage expenses, or have some level of financial responsibility, then financial planning is a must.
Traditionally speaking, financial planning, and more so investing, was reserved only for six-figure earners with substantial money in their accounts. However, thanks again to the combination of technology and transparency in the industry, that’s no longer the case.
This belief is a real retirement killer for far too many households as it prevents many from getting started with financial planning in the first place.
The thing to remember is this; everyone starts at the same place–with $0 in any investment or savings vehicle until they make their first investment.
Myth #7: Financial planning takes too much time
Truth: Financial planning can certainly be time-consuming, however, that’s not always the case. Savology makes financial planning faster than ever. In just a few minutes you can create your own personal financial plan, for free.
Once again, thanks to technology, it no longer takes days or even weeks to get your hands on a financial plan. Traditionally, you would book a meeting with an advisor, meet with that individual, wait for them to create your plan, and then meet with them once again to go over your plan. With Savology, we’ve managed to trim all of this and are able to deliver accurate, personal, and effective financial plans that take an average of five minutes to create.
Myth #8: Once you have a plan, you’re all set
Truth: Financial planning is an ongoing commitment to your financial success.
If you’re serious about reaching your goals and making significant improvements, it’s important to understand that financial planning isn’t a one-and-done type of deal. It requires constant upkeep and maintenance to make sure you are staying on track.
Once you create your financial plan, it’s critical that you take the next steps and continue working on taking action and making strides to improve your situation.
We recommend reviewing your plan monthly and updating your financial profile at least every three to six months. A lot can happen in the span of a few months and frequently checking in will make sure that your plan is still accurate and on track with your current lifestyle and goals.
Myth #9: Financial planning doesn’t work
Truth: Financial planning exists because it works. In fact, financial planning is one of the most certain ways to reach financial success.
There are several benefits of financial planning that have been proven time and time again. Here are just a handful of reasons why financial planning exists:
- Households with financial plans are 2.5x more likely to save enough for retirement.
- Individuals with financial plans feel 83% better about their finances after just one year.
- Households with financial plans make better financial decisions with confidence.
- Individuals with a financial plan have a better relationship with themselves and others.
- Households with financial plans set and reach meaningful goals.
- Individuals with financial plans are more productive while at work.
Debunking financial myths
Now that we’ve debunked nine of the most common financial myths, you’ll be able to better navigate your own personal finances by understanding what’s false and what’s actually true. This information will keep you better informed when it comes to making financial decisions, including knowing which sources you can rely on and which financial professionals you should trust with your hard-earned money.
Your financial future starts today
Savology has helped more than 40,000 households across the United States improve their financial well-being by providing comprehensive digital financial planning. Users can get started with our free financial planning or premium monthly planning memberships, allowing them to build a personalized financial plan, holistic report card, personalized action items, and more. In addition to our consumer-facing platform, we’re helping employers across the country provide their employees with effective financial wellness benefits.