Don’t take the “plan” out of financial planning strategies. It may sound obvious, but most investors skip this important first step. Find out more.
Parenthood piles on enormous responsibilities, including increased financial pressure, yet close to half of parents lack formalized financial planning strategies, according to a recent study from Northwestern Mutual and Facebook.
“Financial planning is often overlooked, when in fact it should be viewed as an important step parents can take to achieve a greater sense of security as they navigate various life phases,” Bill Taylor, vice president of financial planning for Northwestern Mutual, said in a statement.
A small share of parents appears to have gotten the message. About 15 percent said they formalized their financial planning strategies before they started a family, according to The Parents and Planning poll released by Northwestern in August. Nine percent created a plan when they were expecting their child, and 17 percent created a plan following the birth of their baby.
Parents who lack formal financial planning strategies are less likely to save and feel financially secure, according to a recent survey by the Certified Financial Planner Board of Standards, Inc., and the Consumer Federation of America.
Investors with formal financial planning strategies are more likely to feel “very confident” about managing money, saving and investments, than those from households without a financial plan, 52 percent vs. 30 percent, respectively. The study also found that more affluent planners are more apt to save 10 percent of more of their income, and less affluent planners are more likely to pay their credit card bills in full.
“”Having a financial plan increases one’s confidence and effectiveness in managing, borrowing and saving money,” Stephen Brobeck, executive director of the Consumer Federation of America, said in a statement.
For many investors, the road to formal financial planning strategies begins with a consultation with a financial advisor, according to Taylor, of Northwestern Mutual, who said, “We know from our research that people need and want guidance.”