Financial planning is something of a mysterious field to some, and there are a lot of myths floating around about exactly what financial planning looks like and can do for the average tech professional. Here are seven of the most common financial planning myths, along with the cold hard truths about financial planners and what they do for clients.
Myth #1: Financial planning is only for people who have a lot of money.
Truth: Most anyone can benefit from the process of financial planning.
While it’s true that many financial planners target wealthy clients, there are an increasing number of financial professionals around the world who focus their work on younger individuals with lower net worths. Take the tech industry as a fantastic example.
Although many young tech professionals are earning an exceptionally high income, they may also be saddled with hefty student loans and consumer debt. Many old-school financial planners might turn away a ladder-climbing tech professional because they don’t have very many investable assets just yet. However, I view financial planning in a different light. For me, financial planning is all about making goals for your money, and building a strategy that puts you on the path to meet your goals.
Myth #2: All financial planners sell products and earn fat commissions.
Truth: Fee-only financial planners don’t earn commissions.
There are financial planners who focus entirely on selling financial solutions and products, and earning commissions off of their product sales. But there are also financial planners who work on a flat fee-only basis, and won’t earn anything extra for selling you a product. Additionally, there are financial planners who work on an hourly basis. If you don’t want someone selling you things on commission, there are lots of options out there.
3. Myth: I’ll worry about financial planning once I start making money.
Truth: Worrying about financial planning now, even if you aren’t making huge money, will pay off in the future.
Sometimes, when you work in tech, you’re hustling for the first several years at a startup. It’s fulfilling work, and you’re passionate about what you do. But you may feel that just because your current income isn’t anything to write home about, you still could use the help of a financial planner. You never know when the company you work for is going to make it big, and all of the equity you have in the business will need to be incorporated into your overall financial strategy.
Working with a financial planner will help you learn skills that are applicable no matter how much money you are making today. And if you want to make sure that you are doing the right things with your income as it increases, there’s no reason not to consult a professional today and start amassing skills for the future. Plus, there are things that a financial planner can do immediately for individuals at every income level.
4. Myth: Financial planning is just another word for investing.
Truth: Financial Planning encompasses investing, but includes saving, spending, budgeting, and more.
If you are interested in getting your finances in order but don’t think you are in a position to start investing yet, a financial planner can still help you. Financial planners will talk to you about saving, spending, budgeting, income, and more, and help you craft a holistic plan to reach your goals that includes some variation of all of the strategies above. Investing is an important part of getting your financial future in order, but it isn’t all a financial planner will help you with, and it’s only one element of the field.
5. Myth: I can just research this stuff and do it myself.
Truth: Yes, you can. But you have to consider whether you actually will or not, and whether you have the time, skills and talents to be unbiased to your own situation.
There is a whole lot of information out there about how to start planning your finances on your own. But think about whether or not you will really use all of that info, and whether or not you will really use it correctly. It’s just like hiring a trainer at a gym: yes, you can just work out on your own, but all of the research in the world probably won’t get you in the gym and moving like a good trainer will. It’s possible to figure some of this stuff out on your own, but that doesn’t mean that a qualified planner won’t help you reach your goals faster and more effectively.
6. Myth: Financial planning is expensive.
Truth: Avoiding Financial Planning can be a lot more expensive if something goes wrong that you could have prevented.
Financial planning does take some initial investment. But what you are investing in is a stable financial future, and by avoiding that investment today you could be spending a lot more down the line. There are some simple and preventable mistakes that a Financial Planner can help you avoid, and by avoiding just a few costly slip-ups, your planner will pay off quickly.
7. Myth: A financial planner will handle all aspects of my finances alone.
Truth: Your financial planner will provide you with tools and advice, but you will still have to work hard yourself to reach your goals.
A good financial planner will give you the tools necessary to meet your financial goals. But you will still have to use those tools yourself to realize your future. A financial planner is the perfect place to start getting serious about where you want to be, and learning how to get there. But you will still need to work hard and do your part.