Why is it important to have a financial plan? A financial plan helps you achieve your ultimate financial goals. Find out exactly how in this week's Arista Advice.
Hello, welcome to Arista Advice. Question of the week is: "Paul, why is it so important to have a financial plan?"
A plan is important because it's the foundation to help you achieve your ultimate goals. When you have a financial plan, it's easier to make financial decisions and stay on track.
I got a text last night at 8:30 in the evening from a client who said, "Paul, thanks for helping me pay off two of my eight student loans!" His goal at the beginning of the year was to pay down some of his debt and to get a better foundation, and through the year, we've coached him and helped him do that and also take advantage of preparing for the future.
Let me share with you a really cool resource to help you understand the importance of it. There's a book entitled What They Don't Teach You at Harvard Business School. Mark McCormack wrote a book in 1979, and they found that 84% of the students did not have specific goals. 13% of the students did have goals but did not have a formal method of committing to them, and the third group only 3% had clear, written, regularly reviewed, and action plan items to accomplish their goals.
They went back to them 10 years later. Guess which group had 10 times earning potential? Yes, the third group the people that have clear, written, regularly reviewed, action plan items did the best 10 years later.
Let's all remember to take a few minutes during the holiday season write down some goals for 2021, hold ourselves accountable, share them with others, and make 2021 a great year of personal development, financial development and have a well-rounded 2021.