MYTHS ABOUT FINANCIAL PLANNING

You've earned hard, now let money do the same for you

THEY say that money is on the top of everyone’s mind. That’s really true. The fact is that it stays right there, and it requires a big trigger to get moving on it. We then rationalize, and justify our inertia. While my personal view is that financial planning is a universal requirement, there are some show-stoppers which we must recognize. If these thoughts are there in your mind, banish them and achieve financial freedom. The top reasons for procrastination are:

I have too little money
Financial planning is required when the goals you have are more than the funds that you possess. Waiting for the great day when we have accumulated a sizeable corpus to start planning is like living for today, without any plans for tomorrow.

I don’t have enough to spend
Even if you are thinking this, you need a plan, manage credit (or debt) judiciously. Invest the money you receive in a liquid fund and keep a minimum amount in the bank. Prepare a budget and stick to it, you may be surprised with how much you can save.

After I complete my house
I have come across clients who have used marble-tops in their kitchen and granite on their floors as they had funds in their bank account. Only later they realized that their sons education was of greater priority.

I can’t afford planning
Its the same as refusing to consult a specialist doctor even when you are seriously ill and advised to do so. Constructing a financial plan is as important as getting the blueprints to build your home. Paying for these services also makes your advisor accountable to you, so don’t hesitate on this count.

I can do it myself
Some people have an inborn flair for numbers and are organized enough to keep regular track of all their investments. Now the question is: are they emotionally cut off from their investments enough to take the right decisions. A financial advisor has the requisite qualifications and training that a layman can only master to a small extent.

I only invest in FDs
Most of India’s domestic savings are heading to bank deposits. However, with inflation soaring and interest being taxable, you need an avenue which enhances the value of your investments, after inflation and tax.

I don’t need advisers

There is an information overload: the media and the internet make investing look like child’s play. There are many factors to consider: financial goals, cash flow, risk taking ability. If this seems overwhelming, take the help of an advisor, who can recommend changes not for the entire mass, but specifically for you.

I don’t trust advisers
If you lack trust, because of an awful experience previously, the mistake was probably made while hiring the advisor. Make sure you do your homework before choosing your advisor. Remember, you need to exercise the same care as you would while selecting your life partner.

I don’t have the time
This is the most popular reason that people give for procrastinating. Take one step at a time. Talk to people you know and trust, and ask them who manages their finances. Talk to a few advisers; look for the 3 Es empathy, ethics, and education. Invest some time to know your advisor and you can save yourself a lot of time, effort and money! But do it today.