Photographs and Videos: The Difference Between a Financial Plan and Financial Planning

By Lloyd Yamada, CFP®

Like a photograph, a financial plan is a snapshot of your life at a given point in time. It is a worthwhile endeavor that can tell you whether you are on the right path toward achieving your goals, but it’s only accurate at the time it is prepared. On the other hand, financial planning is like a video, a continuous sequence of photographs painting a story of how to maximize the potential to reach your goals and create the experiences and memories of a wonderful life.

A plan is only part of planning. It’s a good start but only a start. Financial planning is a process, a journey that we all undertake for the rest of our lives. It begins with understanding what your financial situation is today, dreaming of where you want your life to be, and creating a reasonable plan to get you there.

Here are some of the benefits of an investment in financial planning versus just doing a plan:

  • Allows for aligning your personal values with your current and future goals
  • Tracks your progress periodically to ensure you are headed in the right direction and adjusts as needed to stay on course, and does so proactively, not reactively
  • Reminds you to keep your eye on your goals and avoid the distractions of short-term events that lead to unnecessary changes in strategy
  • Reduces anxieties that crop up in all of us when financial markets are volatile or global tragedies happen

Engaging a financial planner of your choosing to guide you in making good choices through education and collaboration is the first step in creating a video of your future. Do your due diligence before you select someone.  There are many resources at your disposal, including the CFP Board, the National Association of Personal Financial Advisors, and the Financial Planning Association, among others. Ask your colleagues or friends for referrals to professionals they trust.

Life is about having fun and fulfilling experiences and creating memories that we, our friends, and family will treasure always. Here is wishing you and your loved ones a memorable video of your lives.