What is your attitude towards financial planning? Do you look at it from a comprehensive perspective, analyzing all your financial goals and developing a strategy to achieve all your objectives? Or do you plan for specific goals and needs as they arise? Or, perhaps, do you not do any planning at all?
The Certified Financial Planner Board of Standards published a study about Americans’ attitudes towards financial planning. It found that most Americans fall into one of four distinct groups: Comprehensive Planners, Basic Planners, Limited Planners and Non-Planners.1
Which group suits you best? According to the study, only about 20 percent of Americans can be considered Comprehensive Planners. The remainder are either Basic or Limited planners, or they don’t do any financial planning.
If you’re struggling to reach your financial goals, you may need to change your approach to your financial planning. Below are descriptions of each category. Determine which description best describes you and whether you should strive to belong in a different group.
Non-Planners are individuals who put little or no thought toward their financial stability or their financial future. Most Non-Planners have no strategy for saving for retirement, and many don’t even use basic financial tools such as a budget.
According to the study, only about 10 percent of Americans can be classified as Non-Planners. However, Non-Planners may be more likely to struggle with credit card debt and may have difficulty ever reaching retirement.
Clearly, if you are a Non-Planner, you may need to change your approach. The longer you operate without any kind of plan or strategy, the more difficult it may be to reach your objectives.
According to the study, nearly a third of Americans are considered Limited Planners. People in this group engage in some level of planning, but it is usually limited to one specific financial goal. For example, a Limited Planner may contribute to retirement accounts and have a general sense of how much they need to contribute each month.
However, they may not have a defined investment plan or a budget to manage their spending and ensure that they hit their goals. While being a Limited Planner is better than not planning at all, it also leaves much room for improvement.
The next group is Basic Planners, who account for nearly 38 percent of all Americans. Basic planners have strategies and plans for one or more financial goals, such as retirement or funding a child’s education. They’re also more likely to use a budget to manage their spending and stay on track.
However, Basic Planners don’t look at their financial goals from a comprehensive perspective. That means they are not able to see how their efforts toward achieving one objective may impact efforts to reach another goal.
The remaining 19 percent of Americans can be considered Comprehensive Planners. They look at their financial situation from a holistic perspective. They know how their objectives interact with one another, and they use their financial plan to guide their decision-making.
The study found that two-thirds of Comprehensive Planners work with a financial professional. Also, Comprehensive Planners aren’t necessarily wealthy. More than half of the people in this group report an annual income of less than $100,000 per year.
Ready to upgrade your approach to financial planning? Let’s talk about it. Contact us at Master Plan Retirement Consultants, Inc. today. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
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