Recent extreme volatility in the market has been testing many investors’ nerves — and rightly so; these are uncertain times. Over the past few weeks, we’ve experienced daily volatility rivaling some of the most turbulent times in recent history. With many talking with their coworkers, friends and family about how this volatility is affecting their long-term plans and view of the market, now’s a good time to talk about the importance of financial planning and what drives long-term decision making.

Often when people meet me and find out what I do, they ask me about their personal portfolio and whether I think it’s sound. My answer’s always the same: “I honestly have no idea if this is the right portfolio for you without knowing more about your long-term financial plan.” It comes back to a fundamental principle in prudent money management — the financial plan is in the driver’s seat. Your investment portfolio is like the engine of a car; it powers your journey. But without a map, a destination and a clear route forward, the most powerful engine can lead you in the wrong direction.

A well-developed plan accounts for factors including your income, retirement timeline, current savings, tax liabilities, risk tolerance, long-term goals, estate planning wishes, philanthropy goals and more. Your plan drives your portfolio allocation, asset location and cash management within the greater landscape of your financial situation. If your portfolio is driven by the aim of maximizing returns or preserving capital, it’s important to regularly review and adjust your plan to ensure it aligns with your long-term needs. A portfolio should serve your goals, not define them.

When you have a tailored plan in place, it grants you the following:

The ability to define success — If you know where you’re trying to go, it’s much easier to plan how to get there. After you’ve determined the future income and lifestyle you want, you can know what kind of portfolio it will take to get there. If the portfolio you need to meet your goals is too aggressive for you, you either need to increase your current savings or decrease your expectations for the future. Never allow your portfolio to determine your lifestyle; your goals and risk tolerance should govern your portfolio. As time goes on, check the health of your plan at frequent intervals and determine if your end goal is still on track. The confidence to ignore short-term noise — A financial plan is a long-term tool; it concerns itself with decades, not days, granting you confidence during momentary bouts of volatility and alarming headlines. A financial plan lets you better assess the risks you actually need to take and prevents stress from not knowing whether you’re overexposed to volatility. A financial plan stops you from chasing returns that won’t serve your larger purpose. When your portfolio is tailored to your plan, it’s designed to help manage short-term fluctuations and support your future goals and dreams.

Increased behavioral discipline — When your plan is in place, it’s much easier to ignore the voices telling you to sell during a pullback or buy big into a soaring individual stock. It’s less likely you’ll fall prey to believing the economy is good when your political party is in power and poor when it isn’t. Instead, your plan fixes your finances to a timeline far longer than four years, helping ensure your savings plan stays in place even when things change. When the market influences your behavior, it’s important to be aware of common mistakes that many investors make. A plan will strengthen your resolve and your focus.

Investing without a financial plan is like getting behind the wheel without a destination in mind. Maybe that was fun in your 20s, but is that how you want to govern your financial future? The markets can’t tell you whether you can retire at 60 or afford your dream vacation in five years, but a financial plan can.

The next time you think about your finances, don’t ask yourself, “How is my portfolio doing?” Instead, consider whether your portfolio supports your plan — and whether your plan supports your life.

Zach Harney is a wealth manager at Creative Planning in Monterey, formerly known as Monterey Private Wealth. He welcomes questions you may have concerning investments, taxes, retirement, or estate planning. Send your questions to: Zach Harney, 2340 Garden Road Suite 202, Monterey, CA 93940 or email zach.harney@creativeplanning.com.