Planners 100, Non-Planners 0

Want more evidence that having a financial plan makes you a game winner?

If you’re reading this, you probably already have a sound financial plan to meet your personal and family goals. Here’s another reason you’ll be glad that you do:

People with a financial plan — even those facing economic challenges — feel more confident and report more success in managing their money, savings and investments than those who don’t have a plan, according to a recent report by the Consumer Federation of America.

By a margin of 50% to 32%, and for all but the lowest income bracket (under $25,000), people who have a financial plan are more likely to feel they are on pace to meet all their financial goals, such as saving for retirement or for emergencies.

By an even larger margin of 52% to 30% and across all income brackets, those with a plan are more likely to feel “very confident” about managing money, savings and investments.

By a margin of 48% to 22%, those with a plan are more likely to describe themselves as living comfortably — and interestingly, those earning $50,000-$99,999 who have a financial plan say they live as comfortably as those earning more than $100,000 who don’t have a plan.

At the upper end of the scale, those who have a plan are also saving more of their income and have built greater wealth than non-planners. For example, those with a plan who earn $50,000-$99,999 are more likely to report they save 10% or more of their income (57% vs. 39%) and have accumulated at least $100,000 in investments (37% vs. 19%).

And for those in the two lowest income brackets, people who have a plan report being much more likely to pay their credit card bills in full every month. That is true both for those in the $25,000-$49,999 bracket (46% vs. 26%) and for those with incomes under $25,000 (41% vs. 16%) — proof that everyone finds value in getting a financial plan, not just wealthy or high-income people.

Unfortunately, only 31% of respondents say they have a comprehensive financial plan. Of those who don’t, 38% say they live paycheck to paycheck, 70% say they do not feel comfortable financially and 66% say they doubt they will be able to retire by age 65. None seems to realize that getting a financial plan — regardless of how much money they have or earn — can dramatically improve their situation.

If you know someone who doesn’t have a financial plan, encourage them to get one immediately.

Getting started is easy. Simply contact an objective, independent, fee-based financial advisor.

Originally published in Inside Personal Finance October 2012

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