In essence, financial planning is the overall assessment of an individuals financial situation and objectives with the goal of creating a plan for achieving those financial goals. In broad terms, financial planning is about the management of financial resources. A financial planner is a person who helps individuals set up and maintain a sound financial plan. In general use, a financial planning plan is an elaborate financial analysis of an individuals current and future financial situation by the use of many currently known financial factors to predict possible future income, assets and expenditure. Although this may seem like complex mathematics, it really is quite simple.
When first meeting with a financial planner, an individual may ask questions on what the financial plan includes and what they can do to achieve their financial goals. The planner will answer questions regarding the expected income from various investment projects, current and anticipated debt loads (such as credit card debt), investment strategies, life style changes such as quitting smoking and/or losing weight, whether there are any large expenses that will impact the plan and other questions specific to the individual. It is important to discuss these things very carefully with the financial planner in order to create a truly fair and honest financial plan.
When first entering the world of financial planning, there are several goals to be achieved. Goals range from reducing debts to building wealth. Most people are interested in reducing debts because reducing debt allows them to have more disposable income each month. Other common goals are increasing savings and investing for retirement. Many people want to build a nest egg for their later years.
There are several ways to save for the future goals. The most popular way to save is to invest in a retirement savings plan. Another popular way to save is by saving towards various investment projects including college education, home purchase and tax free investments. In addition, financial planning also involves creating a savings plan to invest for the current goals that you want to achieve in life.
Creating a short term and long term goal chart is an essential part of financial planning. By creating a short term goal chart, it is easier to achieve the long term goals. The process of creating the chart can be accomplished by listing your short term goals and the objectives that you have for achieving them. The objectives then need to be outlined as well as the steps necessary to achieve them. The process of planning then becomes more specific as more objectives are listed and more steps needed to achieve them are detailed on the chart.
If you are currently working but want to make a significant improvement to your financial planning process, consider looking for an accountant or financial planning firm to help you. An accountant can create a comprehensive analysis and report on your current financial situation and any short term goals that you might have. An attorney can help you set up a legal plan that will allow you to meet all of your investment needs. They can also provide advice for any investments that might not be right for your situation and help create a strategic plan to get you from point A to point B.