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				<title>Why Your Financial Plan &#8220;Failed&#8221; (And Why You Still Need One)</title>
				<link>https://freefincal.com/why-your-financial-plan-failed-and-why-you-still-need-one/</link>
				<pubDate>Fri, 20 Feb 2026 07:30:03 +0000</pubDate>
								<dc:creator><![CDATA[M. Pattabiraman]]></dc:creator>				<guid isPermaLink="false">https://freefincal.com/?p=339911</guid>
					<description><![CDATA[A prospective client once told me, “I had a financial plan made three years ago....]]></description>

				<content:encoded><![CDATA[<figure><img src="https://freefincal.com/wp-content/uploads/2026/02/Why-Your-Financial-Plan-Failed-And-Why-You-Still-Need-One.webp" class="type:primaryImage" /></figure><p><span >A prospective client once told me, </span><span >“I had a financial plan made three years ago. It showed my net worth growing, my SIPs hitting my goals, and a clear path to retirement. But today, the numbers are completely different. My portfolio is lower, expenses are higher, and my asset allocation is a mess. What’s the point of paying for a plan if reality never matches the projection?”</span></p>
<p><b>About the author: </b>Jay Sheth, SEBI Registered Investment Adviser and a member of Fee-only India, a group of fixed-fee-only advisors. He can be contacted via his website <a href="https://www.shwealth.in/" target="_blank" rel="noopener">shwealth.in</a>.</p>
<p><span >It’s a fair question. To answer it, we have to look at what a financial plan actually is—and what it isn&#8217;t.</span></p>
<p><b>Assumptions are Not Predictions</b></p>
<p><span >When a planner shows you projections (e.g., </span><b>10% equity returns</b><span >, </span><b>7% inflation</b><span >, or </span><b>8% goal growth</b><span >), those are not prophecies. They are </span><b>assumptions</b><span > based on long-term historical data and your current situation.</span></p>
<p><span >Life happens in the short term. For example, if you assume rent grows at 6% per year, but sudden redevelopment in your neighbourhood causes rents to spike by 20%, that 6% looks like a joke. This happens for two reasons:</span></p>
<ol>
<li  aria-level="1"><b>Incomplete Data:</b><span > A plan is only as good as the inputs. If a client doesn&#8217;t disclose upcoming life changes, the output suffers.</span></li>
<li  aria-level="1"><b>Micro-Environment Shifts:</b><span > Unexpected economic shifts warrant an </span><b>update</b><span >, not a total abandonment of the strategy. Remember: 6% is a long-term average; the path to get there is rarely a straight line.</span></li>
</ol>
<p><b>The Goal is Awareness, Not Accuracy</b></p>
<p><span >If reality rarely matches the projection, is planning futile? Consider this: </span><b>every large corporation creates a financial plan.</b></p>
<p><span >They hire expensive consultants and in-house experts to build these models. Does reality match their plans? </span><b>Never.</b><span > So why do they do it? Because the process of planning forces them to understand the environment, the resources required, and the effort needed to succeed.</span></p>
<p><span >When results deviate, companies don&#8217;t just sulk; they </span><b>pivot</b><span >. Instead of complaining about the initial draft, they focus on:</span></p>
<ul>
<li  aria-level="1"><b>Monitoring</b><span > the plan against real-world data.</span></li>
<li  aria-level="1"><b>Comparing</b><span > actual results with the original trajectory.</span></li>
<li  aria-level="1"><b>Re-assessing</b><span > targets and goals based on new information.</span></li>
<li  aria-level="1"><b>Identifying gaps</b><span > and tweaking the strategy.</span></li>
</ul>
<p><b>What a Good Financial Plan Actually Does</b></p>
<p><span >A plan is a compass, not a GPS. It provides several &#8220;eye-opening&#8221; benefits:</span></p>
<ol>
<li><b> Understanding Your True Financial Health</b></li>
</ol>
<p><span >It quantifies your </span><b>net worth, savings ratio, and risk tolerance.</b><span > Many clients think they save 30% of their income, only to realize—once everything is penned down—that the real number is closer to 10%.</span></p>
<ol start="2">
<li><b> Quantifying Vague Dreams</b></li>
</ol>
<p><span >A &#8220;new car&#8221; or &#8220;child’s education&#8221; is just a dream until it’s a number. A plan turns a vague idea into a </span><b>₹20 lakh car every 7 years</b><span > or a </span><b>₹25 lakh education fund.</b><span > It prepares you for large, inevitable expenditures.</span></p>
<ol start="3">
<li><b> Clarifying Financial Direction</b></li>
</ol>
<p><span >You finally understand </span><b>why</b><span > you are investing, not just where. It provides a roadmap of priorities—emergency funds, retirement, and family goals—so you aren&#8217;t just &#8220;chasing returns.&#8221;</span></p>
<ol start="4">
<li><b> Auditing Your Lifestyle</b></li>
</ol>
<p><span >A plan reveals if your lifestyle supports your goals. Interestingly, some clients realize they are actually </span><i><span >underspending</span></i><span >. They discover they can afford that extra vacation, a hobby, or a car upgrade without jeopardizing their future.</span></p>
<p><b>The Role of Review, Not Replacement</b></p>
<p><span >A financial plan is a living document. You don’t make it once and set it on a shelf; you </span><b>review and course-correct, </b><span >either yourself or with the help of a planner</span><b>.</b><span > Every 2–3 years, you should:</span></p>
<ul>
<li  aria-level="1"><b>Update</b><span > income, expenses, and inflation expectations.</span></li>
<li  aria-level="1"><b>Rebalance</b><span > your portfolio to restore your original asset allocation.</span></li>
<li  aria-level="1"><b>Reset</b><span > timelines if your life priorities have shifted.</span></li>
</ul>
<p><span >The updated plan isn&#8217;t a sign that the first one failed; it is the </span><b>continuation</b><span > of your journey.</span></p>
<p><b>Final Thoughts</b></p>
<p><span >A financial plan will go &#8220;wrong&#8221; on paper many times. Markets will surprise you, and life will interrupt you with unexpected costs. But if your </span><b>decision-making system</b><span > stays intact, your goals remain achievable—even if the route looks different from what you first imagined.</span></p>
<p>The post <a href="https://freefincal.com/why-your-financial-plan-failed-and-why-you-still-need-one/">Why Your Financial Plan &#8220;Failed&#8221; (And Why You Still Need One)</a> appeared first on <a href="https://freefincal.com">freefincal</a>.</p>
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