No financial plan? You’re betting against your future... and you’ll lose
By Yogesh Prasad, CFA, CAIA
The first fact to be revealed is that only 36% of Americans have a written financial plan. Yes, little more than one-third of the population. With their financial futures left up to chance, the remaining 64% are simply coasting through life and hoping for the best.
Even more intriguing is the fact that an astounding 96% of people with a plan are certain they will achieve their financial objectives. It becomes brutally obvious when you contrast it with the ongoing anxiety and uncertainty experienced by people who lack a plan: without a financial strategy, you’re not simply falling behind—you’re risking your future. The table below highlights perspectives on various investment topics across different generations.
General sentiments on Financial Planning by Generations
Do you still believe that a plan is unnecessary?
Based on a survey conducted by Schwab*, Excuses Why People Avoid Financial Planning:
Don’t Pay the Bills The most common response to the question of why they lack a financial plan is
- “I don’t have enough money.” 43%
- “It’s too complicated.” 25%
- “I don’t have time.” 21%
The irony is that these excuses are precisely what keep you stuck: not having a financial plan.
You’ll never be aware of your true financial situation or needs. Simply because you’re trying to think about the details of your money through a glass that is cloudy with water, your experience of the process continues to be overwhelming.
Because you are fighting fires rather than pursuing a defined path, it looks like you are always pressed for time.
A financial plan gives you confidence, clarity, and control—three things that nobody can really afford to live without.
Your life's GPS is financial planning
Consider your finances like a road trip: picture getting into your car and just driving without a destination, a map, or even gas. Even though you might pass through a lovely area, it’s likely that you’ll run out of petrol, waste hours traveling in circles, or end up somewhere you don’t want to be. The table below illustrates how different generations are approaching investments.
Investment preferences categorized by Generations
Now, exchange your gas for your money and your car for your life. You’re adrift without a financial strategy, hoping that one day you’ll “get there.” A plan is your road map, a concise manual that assists you in:
- Specifying your objectives (home purchase, early retirement, debt repayment).
- Determining priorities (what is long-term, what is urgent).
- Choosing when to celebrate milestones (it is important to keep track of your progress)
If you were blindfolded, you wouldn’t drive. Avoid living that way.
What is effective? What is not?
Having a sound financial strategy compels you to assess your current circumstances:
- Do you have enough saved?
- Is your debt manageable?
- Are you truly getting value out of your investments?
Little adjustments made now, like cutting back on wasteful spending or reallocating investments, have a big impact later. Tens of thousands more in retirement could result from even a 1% increase in your savings rate today. That is math, not theory.
Things happen in life. Are you going to be prepared?
Purchasing a home, paying for a child’s education, or retiring gracefully are examples of significant life events that are rarely cheap. These milestones appear like mountains that are too huge to climb without a strategy, so you don’t even try.
A financial plan does two things for your retirement
1. It shows you exactly how much you need based on your goals and lifestyle.
2. It gives you a step-by-step roadmap to get there.
The sooner you start, the easier it is. Your compound interest is your best friend-but only if you invite it to the party now.
The real cost of "winging it"
Financial stress is not just a buzzword; it’s a silent killer. It’s what keeps you up at night, what causes arguments, and gnaws at your mental health. Without a plan, money controls you. With one, you control your money.
Imagine:
- You know you’re on track for retirement.
- You have a plan to pay off debt faster.
- You’re ready for those big moments and curveballs life throws at you.
That peace of mind? It’s priceless. The table below shows how different generations evaluate their sources of information
Source of information grades categorized by generations
Here's how you start:
- Define your goals – What do you want your money to do for you? Be specific.
- Take stock of your current finances – What’s working? What needs to change?
- Build a plan – If you’re not sure where to start, seek help from a professional. It’s worth it.
Conclusion: The future arrives regardless, so you better have a game plan
The uncomfortable fact is this: not deciding is a decision. If you do not take control over your finances, someone or something else will-lenders, circumstances, or life.
You owe it to yourself and to those you care about to have a plan. Not for your dreams, but even for the things that might pop up. If that sounds like you, then let’s get the conversation started.
“Because a better future doesn’t just happen-you plan for it.”
