Your Financial Plan Can’t Be Winning the lottery

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If you are worried that you haven’t done what you need to in order to plan for your financial future, you aren’t alone. Fifty-eight percent of Americans say that their financial planning needs improvement, and a whopping 34% haven’t done anything to plan for their financial future, according to a Northwestern Mutual study.

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The study showed a profound disconnect between what people know they should do when it comes money and what they really are doing. While the majority (67%) of those surveyed consider themselves “savers,” more than half (54%) have more debt than savings. This is an alarming, yet growing, trend.

Many Americans say they are worried about having enough money to live comfortably, or even support themselves, through retirement. Yet only a small proportion have sought any help in planning for their retirement. Forty-three percent haven’t spoken to anyone — even close family and friends — about retirement planning.

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There almost seems to be a growing attitude of, “If I don’t think about it, it won’t be a problem.” With retirement planning, the opposite is true. That is why more than 21% of Americans are “not at all” confident they will be able to reach their retirement goals. This is a very real and legitimate fear. While the vast majority of us spend an extensive amount of time planning for our next vacation, we avoid thinking about retirement. However, it is necessary, and with the right adviser it can be fun! It’s time to think of retirement as a 30- to 40-year vacation and to start planning for it.

Knowing what your priorities are is vital

There are many people who feel that they have access to too much information because of the Internet. They have access to information, but they don’t know what’s good and what’s not, so they worry they will make the wrong choices. A good way to work through those anxious feelings is to think about and establish your financial priorities. Set goals for yourself when it comes to paying off debts, saving for children’s college, saving for your retirement, preparing for emergencies, paying off your home, etc. Then determine what steps you need to take to reach those goals.

People don’t just walk into a home-improvement store and start picking out tools without knowing what kind of project they are working on. They come to the store knowing what they want to build and ask, “What tools do I need to get this done?” This is where a financial planner can play a large role, by helping you think about and establish your top priorities and then working with you on how to accomplish them.

It’s never too late to start

The American lifestyle can be hectic and many feel they have fallen short when it comes to their finances. They haven’t saved the money they should, and they have more debt than they should. This can trigger a self-defeating attitude of, “I’m so behind, what’s the point of starting now?” The problem with this attitude is it couldn’t be more wrong.

Yes, it would have been great to plant that tree you were talking about planting 20 years ago, but guess what, that tree will still grow, eventually providing you with lots of shade, if you plant it today! So don’t dwell on what you could have or should have done. Take advantage of today and make the future you want a reality, by taking the steps to plan for it now. Getting a plan in place is a big step in the right direction. Following a plan is much better than wandering aimlessly. Especially when it comes to retirement planning.

Don’t wait for a windfall to solve your problems

The survey found that “an unplanned financial emergency” is at the top of Americans’ financial fears. Yet those who felt their financial planning efforts need improvement said they would be most motivated to change their habits if they had a “cash windfall.” This is a scary and unfortunate attitude, as most of us aren’t going to win the lottery or inherit a small fortune, so we can’t rely on the “lottery” mentality as our financial plan.

People are under the impression that they need money and then they will make a plan, when the opposite is true. A good financial plan will lead to wealth building. So it is up to us to take charge of our financial futures and building our wealth, instead of waiting for wealth to find us.

Find a financial adviser who really listens

Of the Americans who have financial plans in place, many of them don’t feel the confident that their plan will carry them through retirement. According to the survey, almost 1 in 4 think their financial plans won’t hold up to the turbulence of the economy. This just shows how important it is for an adviser to understand their clients and build trust. Clients need to be “all in” when it comes to their financial plan and understand the importance of sticking to it, because even the best plan is worthless if you don’t stick with it.

There are a lot of advisers who can “talk the talk” by giving you all of the technical aspects of financial planning and investing, but you end up feeling more like you are being talked at, rather than spoken with. The key with something as important as your finances, and in turn your financial future, is finding an adviser who will really take the time to listen to what you want to accomplish.

A financial adviser’s job isn’t just to invest money, it is to understand their client and their entire situation, including their hopes, dreams and goals. Then to take all that into consideration and develop a plan that will not only help their clients to make the future they want happen, but will motivate and educate them so they feel empowered on their path to financial security!

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Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Shanna Tingom is a registered representative, securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Heritage Financial Strategies are not affiliated.