2 Reasons Why I Hate Financial Plans
Being a Millennial is hard. Especially when it comes to money. Firstly, we get the messages telling us that we should have fun; travel; go on as many road trips as possible; and get that sports car now before we get kids and have to settle for a station wagon. On the other hand there are those telling us that we should save; not get into debt; and invest. Then there are these cold documents they keep telling us about to help us navigate through it all. Financial plans. I hate these documents for two main reasons.
1. They give me a headache when I think of getting one done…
The whole process of financial planning is just complicated! Created by Certified Financial Planners (CPFs), it often involves spreadsheets and other number crunching softwares. After which you get (cold) recommendations on what and how you should be using your money. Just the mere thought of having to sift through the millions of CPFs to find the right one that will suit my needs and my BUDGET is daunting. Coupled with how complicated the process of creating one is, all leads me to having one big headache!
2. They feel mechanistic and not personal enough…
Human beings are not robots. According to findings in Neuroscience decision-making isn’t logical, it’s emotional. Therefore, often the logical and black and white decisions that financial plans spell out for us do not see the light of day for too long. The study further goes on to describe how even with what we believe are logical decisions, the very point of choice is arguably always based on emotion.
This is why it’s best to reinvent the wheel when it comes to financial planning. Well, actually not reinvent the wheel but go back to basics. See, in their definition financial plans are partly inspirational helpers that are there to help you determine where you are going with your money. This definition reflects financial plans a lot more as a personal “dreams and goals achievement plan”- and thinking of them this way makes them more appealing. Compare this to eating vegetables because someone somewhere told you it’s the right thing to do vs. eating them because you want to gain muscle. The task is the same but the personal and emotional aspect to the goals is the game changer. Aha! moment anyone?
Many of us have probably heard about financial plans and their use, but never so much as seen, or used one before. A schematic of a simple financial for investing is given by Wells Fargo here. Now, using this simple schematic, here’s a simple example to demonstrate how it could be used to navigate our way around enjoying life while still saving and working towards achieving our goals. I like to rename this as a Dreams Road map.
Professionals in finance (although we love them to bits) can sometimes miss how personal and emotional money is. This removes the simplicity of the process of planning ahead with out money. Since wealth is the ability to fully experience life, it sure would not hurt to add some personality and emotion towards our strategy in building it.
