What is the big deal about having a financial plan?

When I first started in finance, I thought a plan was just paperwork. Clients wanted investments, not binders. But over time, I noticed something important: the people who started with even a simple plan were the ones who avoided many of the big mistakes people make.

You’ve probably been told more than once that you “need a financial plan.” It may have come from an advisor, an online tool, or even AI. Some call it a strategy, some call it a roadmap, and others just talk about goals. Different names, same idea, figuring out where you are, where you want to go, and the steps in between.

So what’s the big deal? Why do most professionals start with a plan? In my opinion, there are two main reasons. First, we need a clear starting point, destination, and path. Second, and less often mentioned, a plan helps you avoid costly mistakes. And in finance, mistakes can compound or knock you off track faster than a good investment can put you back on track.

That’s why a plan matters. It grounds you, and just as importantly, your significant other, in reality and protects you from drift. Let’s look at how you might start with a simple “here–there” plan, how it works in practice, and how it can help you sidestep the most common financial mistakes.

If you’ve ever undertaken a home construction project, you know the process depends on the size and complexity of the job. A kitchen refresh might only need a simple outline of steps. But if you’re adding an entire room, now you need permits, an engineer to sign off, and detailed plans. Financial decisions work the same way. For significant financial decisions, such as buying a home, investing a large sum in a single opportunity, or taking out a major loan, it makes sense to approach them like a home addition. Bring in professionals who can help outline all the steps. For smaller decisions, like buying a term life policy or adding funds to your HSA, you may only need a quick review or input from a few trusted people.

Avoiding mistakes may be the biggest hidden benefit of a plan. Over the years, my wife and I have faced decisions that seemed like “no-brainers.” They looked sound financially, but after writing down the best case, worst case, and most likely case—even on the back of a napkin—we often saw risks we hadn’t considered. That pause and perspective saved us from choices that could have easily set us back.

The real enemy isn’t the lack of opportunity. It’s the unforced errors. Overspending, chasing fads, ignoring risk, or acting on impulse can undo years of progress. A plan doesn’t eliminate mistakes, but it reduces their frequency and their cost. And in the long run, that difference matters more than finding the perfect investment.

As I often tell clients: financial success is not an event, it is the accumulation of all your financial decisions over decades.

DISCLOSURE - All written content on this article is for information purposes only. We utilized ChatGPT and other sources for this article. Opinions expressed herein are solely those of Core Wealth Consultants. Material presented is believed to be from reliable sources, however, we make no representations as to its accuracy or completeness. Core Wealth Consultants, LLC a Registered Investment Advisor in the States of Florida, Indiana and Michigan. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Diversification and asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment loss.