So what's the difference between financial planning and simply having a financial plan? Is there even a difference? The short answer, yes! A financial plan is simply a document that tells you how to spend and save your money, financial planning is actively changing your plan to fit your unique needs as time goes on and things change. Our lives are constantly in motion, and unexpected things happen all the time. When you're engaging in financial planning, you can plan for these changes by updating your plan to fit your needs. Here's a simple way to look at it:
Financial Plan:
- What you need to do NOW
- Stays the same
- Maybe look at it once a year or every couple of years
Financial Planning:
- A plan for now and for the FUTURE
- Changes over time with changes in your life
- Constantly looking and seeing how certain things will affect it
Things happen in life. You may decide that you're not happy at your job and that you want to start a new career. You may decide to have another kid. You might even decide that you want to take an extra vacation every year. When you're actively engaging in financial planning, you're able to look into the future and see how these changes might affect your plan. It's always a good idea to be looking into the future, so stop simply having a financial plan, and start doing financial planning the right way!
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