The Number One Financial Planning Mistake: Not Having a Plan at All

When it comes to investments, most people are extremely afraid of making a major mistake, such as taking too much risk and ending up with poor performance. Rightly so; many of us have learned this the hard way. The result, however, is often inaction (or sometimes action without direction). In reality, the most common and most costly mistake is not having a financial plan at all.

I see many successful individuals save regularly, invest sensibly, and some of them also use financial and tax advisors. From the outside, everything looks fine. But when I look a little closer, I see that many decisions are made one by one, without a bigger plan. They don’t always think about how today’s choices will affect them later. Over time, this can quietly turn into a problem.

Not having a plan does not mean doing nothing. It usually means acting reactively. Investments are chosen opportunistically, retirement remains a vague future concept, and cash, risk, and liquidity are not deliberately aligned with real-life needs. Decisions are frequently outsourced, while no one is responsible for ensuring that everything adds up to a coherent whole.

This matters more than most people realise. Financial outcomes are shaped less by individual decisions than by how those decisions interact over time. Small misalignments, such as excessive risk in one area or insufficient flexibility in another, start to compound quietly. The cost rarely shows up in any single year, which is why it is easy to ignore. The real consequence is not necessarily lower returns, but reduced freedom when it matters most.

Consider a simple example.
Anna and Alex are both 45, with two incomes, steady careers, and a comfortable lifestyle. They invest regularly, have pension plans, some savings, and own property. Objectively, they are “doing the right things.”

What they do not have is a shared plan. They have never defined when they want to stop working, how much income they will need, or how their assets are meant to support that future. Their investments sit with different providers, each following a different logic. Most of their wealth is tied up, while accessible capital is limited. Nothing feels urgent, at least not for the moment.

If they continue on this path, they may discover in their late fifties that their options are narrower than expected: working longer, taking on more risk at the wrong time, or adjusting their lifestyle. Had they stepped back at 45 to create a clear overview and identify gaps, modest changes early on could have preserved far more choice.

The difference is not superior market timing or higher returns. It is having a plan and being intentional about finances early enough that matters.

Financial planning is often misunderstood. It is not about predicting markets or maximising performance. It is about creating a structure that links what you own, what you need, when you need it, and which risks are relevant to you. Returns are a tool within that structure and not the strategy itself.

Without a plan, money has no direction. And while this may feel comfortable in the present, the cost of that comfort tends to appear later, when time has already done its work.

We have busy lives, we postpone ‘complex’ topics, and when it comes to investments: time = money.

Let's start the conversation. You will be amazed at how much more relaxed you will feel when you have a solid plan for yourself and your family.

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Photo by JordanMadrid on Unsplash

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