Top 3 Reasons You Should Have a Financial Plan

For those of you living under a rock, the Dow Jones Industry Average lost a lot of points recently in a massive sell-off. But, do you know what I’m doing with my money and investments?

Absolutely nothing! I have a financial plan, and I am sticking to it. Having a plan helps you weather the storm and gives you the confidence to stay the course.

Now is not the time to be selling your investments. Just like the recession that rocked the stock market in 2008, selling in a down market when you do not need your investment proceeds is a recipe for disaster.

Here are three reasons why you should have a financial plan…

A Financial Plan Will Give You Have Peace of Mind

Having a financial plan will give you a sense of safety and security. It eases your mind from many worries when the stock market tends to look like a roller coaster. A recent survey of investors found that 40% of people with a financial have a positive outlook on their financial situations.

They believe that their finances will improve over the coming year. Almost 80% of American adults claim to have a plan, but studies have shown that less than half actually only have a financial plan in their heads. And, only 11% in the study had an actual written plan in use.

You Have a Better Outlook When You Have a Plan

It is hard to tell where you are going if you do not plan to get there. It is kind of like following a map on a road trip. You know the destination, and your route helps you get there.

You may divert off your original route from time to time, or you may reassess the specific route you are taking. The same thing is true of your plan. If you have a financial plan, you know what your goal is in the end.

Are you saving for early retirement? Do you want to send your kids to college with no student loans? These are all great financial goals, but you need to have a financial plan to get there. If you have a plan, you are not locked into stone, but it is a great framework and building block to your financial journey.

Stay on Track When You Have a Plan

When you have a financial plan set up, you can weather the storms that the market throws at you. If you know that you are saving and investing for a specific financial goal, it is much easier to follow your plan if you actually have a financial plan. The best financial plans are written out and specific. Do not hesitate to find a certified financial planner to help you develop a plan that covers every aspect of your financial life.

When the market dips or even crashes, that is not a time to get off of your financial plan. It may be the perfect time to reevaluate your plan and reconfirm that you are still headed in the right direction.

If you’re looking for places to keep traditional investment accounts, you might want to check out investing with Betterment or Stash Invest.

The newest robo-advisor on the market called M1 Finance gives the more established, sophisticated investors great investing options. M1 Finance simplifies the investment process for beginning and experienced investors alike. Unlike other robo-advisors, M1 Finance does not charge a fee, and it gives you the option of taking more control over your investments if you want them (and less if you don’t).

But, a market sell-off like yesterday’s 500 point drop is not a time to panic sell. It is quite the opposite. It is a great buying opportunity for stocks and mutual funds if you have a long time until your retirement.

Continue to stay the course and follow your financial plan. If you do not have a financial plan, now is the perfect time to set one up. Everyone should have financial goals and a plan in writing on how to tackle them.