Financial Planning Basics

Securing your financial future is a serious matter. Having a vision and a plan for your financial future brings the order and discipline you need, and ultimately the control and peace of mind you desire, in your financial life. Financial planning can help you define, pursue, and achieve your financial goals.

Here are some basics of financial planning:

What is financial planning?

Financial planning is a process that involves identifying your financial goals, and using sophisticated saving, investment, and tax strategies to achieve them. Some of your financial goals may include:

  • Ensuring a financially secure retirement
  • Building and preserving wealth
  • Funding your child’s college education
  • Paying off debts
  • Reducing the financial risks associated with devastating events
  • Creating income in retirement
  • Maximizing wealth transfer
  • Establishing charitable legacies

What is the financial planning process?

Financial planning is the following six-step continuous process designed to help you define, pursue, and achieve your financial goals:

  1. Define and agree with your financial objectives and goals
  2. Gather your financial and personal information
  3. Analyze your financial and personal information
  4. Develop and present a financial plan
  5. Implement the financial plan
  6. Review and update the financial plan

What is a financial plan?

After thoroughly understanding your financial goals and analyzing your current financial and personal information, your financial advisor prepares for you a financial plan – a document outlining your current financial position and the steps you need to take in order  to achieve your financial goals within your timeframe. Once your financial plan is implemented, your financial advisor periodically reviews it with you and updates it when needed, to ensure that your financial plan remains on the track to achieving your financial goals in a timely manner.

What are the benefits of financial planning?

There are many benefits to actively planning for your financial future. Going through the financial planning process –

  • Helps you crystallize and prioritize your financial goals.
  • Gives you a clear sense of where you currently are and the steps you need to take to get to where you want to be in the future.
  • Brings order, focus, and discipline to your financial life.
  • Improves your financial habits and behaviors.
  • Gives you the tools to monitor and measure your progress towards your financial goals.
  • Gives you control and peace of mind regarding your financial future.
  • Increases the likelihood of achieving your financial goals.

No matter what your financial goals, planning to achieve them is the first step of your journey. Planning for a desired financial life is a smart and responsible thing to do for yourself and for your loved ones. Before you start your search for a financial advisor, please read the article 5 Things to Consider While Selecting a Financial Advisor to find the right financial advisor for your needs.

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