‘Oh gosh, you know that’s something I’ve been considering’
‘When I start making more money I will’
‘I’m still young, I have plenty of time to save’
‘I’m not too versed in Finances’.
Sounds familiar? It should. These are just a few things we Trinbagonians tell ourselves to make our lack of Financial Planning excusable.
The reality is that most of us grew up seeing our parents and grandparents using old school money saving techniques like saving money in the mattress or the KLIM pan on top of the kitchen cupboard. Or joining Ms. Mavis down the road sou sou, with hopes of receiving an early ‘hand’ to do what they needed to do. Just as with many other aspects of our daily lives, for many of us, our versions of Financial Planning and our mindsets have been shaped by our unique culture.
Did these methods work for them? Maybe. Although these saving methods may have worked back then, these techniques are no longer enough to facilitate the type of wealth and big dreams of our generation. Financial planning has taken on a whole new identity.
Have you moved with the times or are you still stuck in the habits and mindsets of your grandparents while hoping and dreaming of a better future? Are you ready to make the shift to success?
Here are 10 misconceptions about Financial Planning you need to change to help you achieve the lifestyle you see for your futureself.
10. Financial institutions don’t offer good interest returns on your money…
We understand. You are fed up and dissatisfied with the lack of Financial Planning options available locally, however, there are alternative options. If you feel like the lack of diversity and low returns being offered by traditional banks, credit unions and insurance companies do not entice you, then maybe it’s time to move away from traditional banking and insurance and explore other options.
Smart financial choices may require you to be open to taking the blinders off and reviewing the BEST options for YOU.
9. My insurance plan has me covered for my financial future…
Insurance plans are important for those unexpected life curve balls, but are these enough to satisfy your future money needs? You know what they say about putting all your eggs in one basket.
Putting money away is just one way to plan for your future. What happens if life happens? Your financial plan should be so much more. Emergency funds, budgeting, wealth building, working toward your futureself, such plans require much more than what an insurance policy or annuity can provide on their own. If you’re looking to build wealth your best bet may be to consider a high earning investment option which can actually add money to your money, leaving you with more than you put in over time.
8. My company pension alone is enough to retire on…
It might be, if you’re planning to live a more scaled back lifestyle than you currently are at retirement and if inflation doesn’t rise. If you have intentions of changing your current lifestyle and even want to include more to your life such as travelling the world, having all bills and expenses covered, hitting that bucket list or spoiling your grandchildren rotten, then you’ll need more.
Supplementing your current retirement plan with additional investments is your best option to bring you closer to achieving your ideal retirement. Even a little extra a month now can make a huge difference in your retirement income.
7. Party now, plan later, I have all the time in the world…
The decisions you make in your 20’s and 30’s forge and shape your future.
Shape is an understatement. The choices we make in our 20’s, and 30’s drastically affect our lives ‘later on’. Later on creeps up on you quicker than it takes to burn fried plantain and by that time you have to play an unwanted game of catch up to get back on track to living your best life.
Imagine the comforted feeling of waking up one day at 55 years old and not having to stress about money or life goals. You can enjoy and make the most of your youth, but that is where a financial plan comes in handy, to help you save along the way.
6. I’ve been budgeting all my life, I can handle my finances
Are you even a Trinbagonian if you don’t have a diary or planner sitting on the desk containing several budgets and money plans?
This may come as a shock to some but a budget is not the only element of a financial plan. Although a budget has its purpose, it’s not sufficient to take you through the various stages of life comfortably. There are other elements of a financial plan you need to take into consideration such as goal planning, net worth, debt management, retirement and even estate planning. Though each has a separate role and function, they all work together to meet your money and life goals.
5. Owning my own business is the best financial plan…
While owning your own business may provide you with the financial freedom you crave, that alone cannot guarantee your road to success will be a smooth one. Statistics show that most businesses fail within the first three years due to several factors including mismanagement of finances.
For your business to survive, there must be an actionable plan in place for the money you will make. A business is not a bottomless pit of cash from which you dip whenever you feel like it, some type of Financial Planning is advisable to separate personal and business funds, to determine how much to pay yourself to sustain your needs, allocation of profits, payment of taxes and all the other intricacies that go hand-in-hand with running a business.
4. A financial plan is too rigid and doesn’t offer flexibility.
Your financial plan is not set in stone and does allow some flexibility. It’s actually advisable to reassess your financial plan often…especially as you go through different life stages. The only constant things in life are bills and change. Things change due to conscious efforts or through unforeseen situations. Your priorities may need to be tweaked to meet your current circumstances and that’s okay.
Having a financial plan also doesn’t mean you are resigned to having no social life. It’s okay to buss a lime every so often just be sure to include some ‘liming money’ into your plan to cater to your entertainment needs. By having discipline and making good choices you can still have your cake and eat it too.
3. Financial Planning is for the rich…
Whatever income you have right now is enough to get started. Contrary to what a large percentage of Trinbagonians believe, you do not have to be rolling in dough to have a plan for your money. Actually, making the right steps now, following through while assessing and changing negative money management habits to positive ones can help get you closer to your desired financial goal.
It’s like a revolving door or as we like to say, “chasing your own tail” – waiting to get rich to start financial planning when you’re unlikely to get rich without a financial plan. Unless you win the lotto or plan to inherit a huge sum of money, you cannot realistically expect to magically gain wealth without putting in the work and engaging in some type of financial planning.
2. It’s too late for that, my time to study financial planning has come and gone…
There is a saying that goes ‘the best time to plant a tree was ten years ago, the second best time is now’.
It is never too late to live your dream life and to start planning for goals such as financial freedom and retirement.
It’s normal to feel anxious and stressed about your Financial future, especially when you feel like time has run out and you think you don’t have enough money to live or retire comfortably. Having a financial plan can actually take away these feelings of inadequacy in a way you would not believe.
An experienced Financial Coach can work with you to define your life or retirement needs and use knowledge of your current financial position to make adjustments, change bad spending habits, find ways to supplement and fill gaps in your savings and create the best outcome for you.
1. People like me don’t need a financial plan…
Many Trinbagonians believe a financial plan is not for them. Could it just be the cultural mindsets and other personal beliefs playing tricks on us! ‘Our grandparents never had all of these fancy plans and they did pretty well’.
Sure, but your grandparents also lived simpler, less complex lives than we do now. They were able to accomplish so much more with less effort. You could raise and adequately provide for a family on a single income. In the words of Nappy Mayers ‘ I know them days done pass and gone and I know that life must carry on.’ Times have changed and so should your mindset.
Tracking your money and introducing various elements of a financial plan such as budgeting and managing expenses can help you to take a deeper dive into your finances and can help curb mismanagement of money and reveal excessive spending habits.
A financial plan if properly utilised will help you manage your current finances to build future wealth and make your goals and dreams more attainable.
If your goals include stressing less over money and making your money work for you, overcoming misconceptions is an important first step in the right direction.
