Do you think a financial planner will give you the answers you need? Possibly, but only if you understand and contribute. Don Shaughnessy addressed this recently in his daily and thoughtful MoneyFYI blog, The Client Is the Planner and the Planner Has Responsibilities. Addressing financial planners, he writes,
The key point is a client must be better informed than they typically are. The client is the planner. They must not abdicate responsibility for the outcome. They must be an informed participant. Even the leader.
Besides, people make more mistakes when they don’t understand what they are doing and no mistake is cost free.
He advises individuals, “Once you understand a little about how things connect and work together, we can have a productive conversation aimed at creating an adjustable process that will tend to get you where you need to be.”
This is where future-focused spreadsheets come in. Visualize your possible future year-by-year. What happens if I spend less and save more? How does compound interest work? Watch the alternatives play out. Understand the trade-offs.
I had a financial planner in one of my classes and we built a spreadsheet from basic principles to look at saving and investing for a future goal. She said that her company had programs to do this type of calculation and produce an answer, but this was the first time she really understood it, seeing how each year influences the next.
Visualize your financial future. Watch it unfold. Then plan for it.