Financial Planning

Planning. Whether it’s planning your day or planning your future, having a plan is important to making smart decisions. Planning especially comes into play when thinking about your finances. What is financial planning and what does it include?

Financial planning involves setting and meeting financial goals through proper resource management. There are both short-term and long-term considerations. How much insurance should you carry? How much should you save to afford a comfortable retirement? Are you buying a new home? Saving for a child’s education? Financial planning points out how each financial decision you make can affect other areas of your financial world.  It provides direction for your financial decisions.

Can you take care of your own financial planning? Sure. But like anything else in life, having an expert in the field help you with the more difficult decisions can be beneficial. A professional financial planner can help you make the best decisions about meeting your goals. A planner can provide a more unbiased look at your financial “big picture.”

There are six basic steps associated with the financial planning process:

1. Establish and define what you want to accomplish wita professional planner will do for you. This includes explaining the services to be provided, payment and length of service.
    
2. Gather financial data. This will help the planner define your personal and financial goals by understanding your time frames and tolerance to risk.
    
3. Analyze and evaluate your present situation including such areas as assets, liabilities, and cash flow.
    
4. Make a recommendation that covers your goals and timeframe. The planner should review these recommendations and make any appropriate revisions.
    
5. Make arrangements to carry out the planner’s recommendations.
    
6. After your plan is put into motion, it must be monitored to be sure you progress toward your goals.

How can you maximize the benefit of financial planning?

• Set measurable goals—Be specific so you know when you reach your goals.
   
• Understand the effect of your decisions—Each decision you make has the chance of affecting another area of your life, such as your tax situation.
   
• Re-evaluate your situation periodically—life changes such as marriage, birth(s) and job status can change you financial goals. Be sure your financial plan keeps up with any of these changes.
   
• Don’t delay, start today—There’s no time like the present when it comes to having a savings plan. The sooner you start, the sooner you begin to reap the benefits.
   
• Be realistic—financial planning is a lifelong process; don’t expect it to change your situation overnight. Also remember there are things beyond your control (stock market, inflation) that will affect your planning.