Why Do People Fail To Do Financial Planning?Share this post
Don’t Fail to Do Financial Planning
When did you last do your financial planning ? The progress at which financial planning in India is growing is nothing to be proud about. It is no doubt slow and the reasons are many and varied. I have tried to jot down some reasons why people avoid financial planning. If you’re like most Americans, you probably didn’t make a new year’s resolution to get started with long-term financial planning. A staggering 84 percent of respondents to a New Year’s Resolution Survey from Allianz Life Insurance said that financial planning was not among their 2014 resolutions at all—the highest percentage ever to reveal that in the survey’s history.
So, Why Do People Fail To Do Financial Planning? We have observed that many otherwise intelligent and responsible people fail to create a financial plan.
Reasons include such things as:
1. Financial planning requires paying a professional in the present for something that is ultimately accomplished in the future. For many, paying for an intangible (such as advice and counsel) is a new thing. Not everyone is willing to spend money today for a future benefit that may be hard to calculate accurately, and that cannot be guaranteed.
2. Financial planning is not “required” so it is easy to ignore. Life is so busy and complex just dealing with what is required, that it’s easy to ignore future planning until it’s too late. Too often, the “urgent” replaces the “important.” For example, everyone files a tax return because the government requires it. But the majority of people do not do proactive tax planning to reduce their tax burden. It’s similar to the way many people approach medical care. They react immediately to aches, pains, and injuries as they occur, but do very little with preventive strategies. In short, financial planning needs to be proactive rather than reactive .
3. There is no obvious pain to avoid .We, as consumers tend to pay for things that help us avoid pain. However, the pain of not planning often does not occur until retirement, or even after death—and is suffered more by family members than by those who failed to plan.
4. Many families don’t know where to begin the process. They are inundated daily with messages from professionals, mass media, family and friends on what they “should” be doing with their money. Unfortunately, many do not have a formal process to develop a personal vision and goals before they begin the planning process. Without a sufficient preliminary process many families end up with executed legal documents, investments, and insurance policies that do not integrate into the overall desired objective.