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5 Reasons Financial Planning Is Beyond Numbers

Updated: Nov 29, 2020

By Helwa Sofni

Financial planning is beyond numbers and money. What’s stopping you to take charge of your own finances now?

Personal Financial Planning in a simple explanation is about how to better manage financial resources to achieve personal financial goals.

The word Financial leads us to think it is very much about numbers or anything involving money. It is often relating to savings and investments or more specific subjects like debt management, retirement plan, risk management etc.

It’s true that the financial planning process technically involves mathematical and financial calculations. After all, it is necessary to identify your present financial position and the amount of money you need to live out specific dreams in your future. And the result of the process defines the deficit or gaps, surplus, ratios, rate of return or cost of financing and many other benchmarking. Numbers, numbers, and more numbers.

However, to look just at the numbers themselves can be quite meaningless. It is more important to understand what these numbers mean. Having a good financial plan leads you to find your true sense of purpose. It is about shaping your values and your belief. You need to consider what life will look like and what you wish to explore and do with your life.

Here we highlight 5 reasons why having a financial plan is not just about numbers, but rather a way to enrich your life.

Reason #1. An expression of love

A financial plan starts with setting your financial goals which means your life goals. When you have a clear goal in mind, it gives you something to focus on.

Common financial goals are:

  • Stay ahead of inflation and maximize the return on your assets

  • Have a comfortable standard of living for yourself and family

  • Retire comfortably and maintain your desired lifestyle during retirement

  • Sufficient funding for the your children’s education

  • Fulfil religious obligation

  • Avoid unnecessary debts incurred

  • Security to sail through unexpected financial upheaval

Regardless your gender, age, marital status or background, when you are goal-setting, you are actually acting out of love for yourself and the people around you. You want to make sure you fulfil wishes and dreams, and you want a better and happier life, for yourself and for them.

A study by Harvard Business has shown that people with goals are 10 times more successful than those without goals. On top of that, those with written goals are 3 times more successful than those with unwritten goals.

Hence your actions in having a Financial Plan leads you to success that positively impacts those whom you love. It is an expression of love.

“Our purpose is to steer an undeviating course in that direction. A man without a purpose is like a ship without a rudder—never likely to reach home port. To us comes the signal: Chart your course, set your sail, position your rudder, and proceed.” – Thomas S. Monson

Reason #2. Agility in crisis management

Sometimes life presents unforeseen events like sickness or accidents. Sometimes, despite trying hard, you do not achieve what you strived for. Loss of job, divorce, etc. are among biggest life transitions with negative financial consequences.

A regularly reviewed financial plan will help you to put negative events in perspective. You can assess and re-prioritize which things are important to you. Once priority is determined, you can refocus your financial plan and then this allows you to move ahead and enjoy life. In other words, it strengthens your mental preparedness during the storm.

In financial planning, one of the important assessments is about your exposure to risks that are often beyond your control. Since we cannot predict exactly which risks will come your way, not every risk can be for certain covered by a plan. However, the skills that you derive from understanding and living by your financial plan, such as being financially independent, being financially savvy, having acquire more life skills and competency, these will help you adapt to challenges thrown your way.

No matter how you are left financially after a crisis, what matters is how prepared you are to keep moving forward. With a regularly reviewed financial plan, your preparation is already in hand to make you emerge a winner despite whatever circumstances you are recovering from.

“Failure to prepare is preparing to fail”- Benjamin Franklin

Reason #3. Enjoying life to the fullest

A financial plan not only addresses the commitments that you need to fulfil. It also covers or uncovers your other life goals such as an expensive hobby or a wish to travel the world.

While there are so many life goals we want to achieve, we may also at the same time have limited resources. How do we know how much to sacrifice versus how much can we enjoy?

A well-made and regularly reviewed financial planning will help you to:

  • Identify steps to help you raise enough funds to pursue your dreams such as pointing out where you can save more or getting your investment portfolio back on track.

  • Understand better useful concepts like ‘delayed gratification’, the importance of applying to those concepts to your daily life, and how to do so without getting stressed over them.

  • Discover life goals that align with your true values and reality. For example, instead of wanting to be a billionaire traveling the world on your own private jet, you shift focus to taking care of your health, taking care your relationships, or even upskilling yourself in your areas of interest.

Thus, financial planning will lead you to truly figure out what you really want in this life and help you achieve these meaningful goals.

“The best advice I could give anyone is to spend your time working on whatever you are passionate about in life”- Richard Branson

Reason #4. Leaving a Legacy

Being human, we know that one day we will say a goodbye to this world. The issue is we don’t know when the time is.

While we cannot control our fate, being a responsible person we should take charge of what we can control. This means making it easier for those who survive us.

When we are no longer on this Earth, a financial plan brings these benefits to those who have survived us.

  • A 1-stop shop for them to find our financial data, including important documents. It is important that while we are still alive, we do regular housekeeping to curate our data in order to consolidate and organize them well for our beneficiaries.

  • A clear line of succession to what you have left behind (also known as your estate). Less arguments, less stress, less confusion, and less frustrations. This will also help for a quicker distribution.

Reason #5. A higher purpose

A well-maintained financial plan is one that is regularly reviewed. This is to adapt to changes in your life, allowing for improvements to be made.

There will come a time whereupon reviewing your financial plan, it is no longer about a monetary number you are chasing. Instead, you will achieve a sense of success having come thus far. At this point, what becomes important is giving back to society.

When you decide to make this a better world a better place for others, you are on a different plane altogether. You have uncovered a higher purpose to live for.

Where to start planning your finances

Regardless at what stage you are now, it is highly encouraged that you start your financial planning journey.

Financial planning is indeed a life planning. It is about managing our own expectations and emotions. It is about being grateful for what we have in our life. It motivates us to become better and stronger. It is also about our dreams and thinking about our loved ones and ultimately peace of mind. Working with a competent and ethical Certified Financial Planner who puts your interest first will enable you to reach this success.

“The best way of learning about anything is by doing”- Richard Brandson

Get connected to Helwa for financial planning advice

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