These days, stress is practically unavoidable. We’re stressed about work, our families, housing, and everything in between. But there is one thing in particular that stresses out Americans like nothing else — money. According to a 2021 Capital One CreditWise survey, 73% of Americans rank their finances as the most significant source of stress in their life. From student loans to saving and investing for the future, many people feel lost when it comes to their financial situation. Thankfully, it’s easy to alleviate some of that stress surrounding your finances. In this blog post, we’re going to take a look at three different ways financial planning can lower your stress.
But first, let’s talk about what financial planning is because it’s not quite as simple as it sounds. Financial planning is the development of a long-term strategy to manage your finances wisely. This strategy usually involves sitting down with a financial professional like a CFP® who can help you understand the whole picture when it comes to your money. Even if you already have a little saved for the future, one of the best things you can do is work with an advisor who can help you put a plan in place and track your journey. Not only can they make sure that you’re making good progress toward your goals, but they can also relieve some of the anxiety you’ve been carrying around when it comes to thinking about money and the future.
1. Create Wealth
The first way financial planning can alleviate stress in your life is by helping you generate more wealth. Many people believe that the best place for their money is a savings account at their bank of choice. While this investing does generate some interest, that interest does not compound like it would when placed in a different investment account. With the right financial advice, you can actually make your money work for you.
Far too often, people choose to do the exact opposite and sweep their financial fears under the rug. This not only inhibits you from tackling financial problems head-on, but it can make your financial situation worse. That’s where financial planning can make all the difference. With an intentional financial plan, you can learn how mechanisms like compounding interest and investing for retirement can help you create wealth and manage it in the best way. Financial planning can help you maximize your return on investments, delivering new ways to build wealth that you may not have even known about beforehand.
2. Avoid Pitfalls
Another way financial planning can help you figuratively lower your blood pressure is by ensuring that you avoid common financial mistakes. One example of this is preparing for retirement. Many people aren’t sure when or how they’re supposed to start saving for retirement. Many don’t have a clear pulse on the investments they currently have. Even if they rely on an employer-sponsored retirement account, some people don’t fully realize the policies behind each employee-sponsored investment, such as the penalties that come with accessing that money before it’s vested.
Easy mistakes like this can make financial decisions more stressful than necessary and cost you even more down the line. With financial planning, you can save stress and money by making sure you’re on the path you want and knowing how to plan for unforeseeable circumstances.
On top of planning for retirement, financial planning can help you prepare for a rainy day. Almost everyone will experience some form of financial hardship at some point in their life. It may be catastrophic like filing for bankruptcy, experiencing a huge medical expense, or maybe something more benign like a temporary job loss. Having a financial plan lets you accumulate wealth and set up a fallback like an emergency fund. An advisor can also guide you through which investments are the best to pull money from without incurring a penalty. By avoiding pitfalls and preparing for unforeseeable circumstances, financial planning can help you navigate through economic uncertainty like nothing else.
3. Accelerate your progress toward future goals
Financial planning gets you to where you want to be, faster. Whether that’s saving for the future, building wealth, or planning for retirement, a solid financial plan makes sure that you don’t step off the path of least resistance. There are many different ways to invest your money and grow your financial portfolio. A financial advisor is the key to making sure you will get to your financial goals in a timely manner. Suppose you’re not seeing the kind of growth that you need. In that case, they may be able to recommend a more aggressive investment strategy or advise you on which channels deliver dependable dividends over time.
Your investment potential is often linked to how early you start investing your money. This means that the earlier you get to creating a financial plan, the quicker you can achieve your vision of financial success. That doesn’t mean that you have to start when you’re twenty-five. The best time to start saving for retirement is yesterday, but the next best time is now. So even if you’re forty-five or fifty-five, it’s a great time to start planning.
Cut the stress out of your life
Stress is pretty much unavoidable these days, but that doesn’t mean that stress needs to be a permanent fixture in your life. If you feel especially anxious about your finances, it might be time to consult a financial expert like those at Four Points Wealth Management. We provide holistic financial planning and investment management services, and we’re always here to help.
Unlike other financial advisors, Four Points Wealth understands and incorporates the softer side of financial management into developing your investment strategy. We understand that you have a story that shaped your view on money, and it impacts the financial decisions you make. It’s our goal to help you relieve financial anxiety and maximize your potential for financial success.
If you’d like to discuss your current financial situation and see how a plan can benefit you, please reach out to me. I am happy to be an informal sounding board as you work to create the future you’ve always envisioned.