5 Ways Financial Planning Can Help

In the rush of daily life, planning for anything more than a few days in advance can seem like a headache. It's natural to wonder: Does financial planning really help?

When it comes to saving money, people tend to fall into two camps: nonplanners and planners. Nonplanners typically save when they can, perhaps putting a small amount into a workplace retirement plan, hoping that everything will work out in the long run. Planners generally know what they're saving for, how much they need to put away, and how long it will take them to reach their goals.

Does the first type sound more like you? If so, you're not alone: Only 36% of Americans have a written financial plan, according to Schwab's 2024 Modern Wealth Survey.¹ Of the rest, 43% said they didn't have enough money to make a plan worthwhile while others said it seemed too complicated or they didn't have time to develop a plan. The bright side is a majority recognize that they can do more to stay on top of their finances.

Here are five ways financial planning can help you save for your future.

Of the 96% of people with a written financial plan who are confident they'll reach their financial goals, 76% say they're more in control of their finances because of it. Financial planning allows you to set a measurable goal to work toward. Because you can track your progress, you can reduce doubt or uncertainty about your decisions and make adjustments to help overcome obstacles that could derail you.

The most common reason cited for not having a financial plan is "I don't have enough money." This is a misconception. Planning, even in small steps, doesn't require large sums of money to start.

In fact, financial planning can have a profound impact on lower-income households by helping people improve their saving and budgeting habits. A written plan helps prioritize goals and as mentioned earlier, provides a way to gauge success.

Your financial plan can give you the full lay of the land: You'll know what your goals are, how much time you have to reach them, and how comfortable you are with risk. Once you have a comprehensive view, you can figure out how to reach each individual goal.

That will involve both saving—setting aside money you'll need in the short term or for emergencies—as well as investing, which is setting aside money you'll need in the long term and that, ideally, can grow. Our survey found that 3 in 5 Americans are investors, and with your financial plan as a roadmap, you'll be better able to make thoughtful investing decisions—instead of moving forward without a sense of direction and hoping for the best.

Financial planning isn't just about investing; it's about what money can do for your confidence, security, and quality of life—such as the protection that life insurance offers or the peace of mind that an emergency fund can provide. Having a financial plan supports sound money habits as well.

Your approach to life can influence every decision you make, including those that involve your finances. By understanding the type of person you are with regard to planning, you can take proper steps toward reaching your financial goals. 

Here are six financial planning personalities:

• The Organizer loves lists. Categorizing and arranging everything from their sock drawer to their personal finances gives them a warm, fuzzy feeling.
• The Architect is a master of both creativity and logic. They not only imagine the future but design solutions to make it happen.
• The Philosopher, from the Greek word meaning "lover of wisdom," enjoys thinking about and solving problems.
• The Dreamer is a free spirit who shakes their head in confusion at all those who schedule their lives to the last detail.
• The Improviser is typically quite self-sufficient with a deep desire for independence and doing things their own way.
• The Maverick, fearless and unapologetic, would rather reshape their world than try to fit in it.

How can you plan according to your personality? 

For organizers, architects, and philosophers, forethought and proactively finding solutions are in your nature. Financial planning can offer a sense of security while leaving room for improvement and possible growth.

Dreamers, improvisers, and mavericks may prefer spontaneity, but even a bit of planning can significantly help you achieve the freedom to live the way you want while fulfilling the future you imagine. A written plan can provide the structure to keep you financially grounded while allowing you to make changes on the fly or use your earnings to support a carefree lifestyle.

Financial planning may sound like a chore, but it provides a foundation for understanding, tracking, and achieving your goals. Whether you're saving for a single goal, like a new house or retirement, or you need comprehensive planning and wealth management, a financial advisor can help you with identifying your priorities and creating a plan.