Financial Planning Basics
January 16, 2015 | Category: Future Planning
| Author: IFG Integrity Financial Group
Understanding Financial Planning
You may have heard the term “financial planning” before and wondered what it meant. Maybe you’re started thinking about making your own financial plan, but weren't sure where to start. Maybe you've tried the “do it yourself” approach, and have decided it might be time to work with a professional.
What Is Financial Planning?
To put it simply, financial planning is the process of setting and maintaining a plan in order to help you meet your life goals. Life goals can include buying a home, building a savings, putting your kids through college, or planning for retirement.
The entire process involves many steps to take a “big picture” approach to setting and achieving your goals. If you only look at one area of your financial life and do not examine everything as a whole, there might be weaknesses. This could cause you to lose money unknowingly and unnecessarily.
Through this process, you can identify where you currently stand, figure out your long term goals, and implement a strategy to get there without taking on an inordinate amount of risk, based on your current situation and available options.
The TRUE Benefits of Financial Planning
Financial planning provides a long-term path to help manage all major financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances.
For example, how you fund a qualified retirement plan or pension can have one of the largest impacts on your ability to retire down the road. If what you knew about retirement plans turned out not to be true, wouldn't you like to know about it? By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also grant yourself a degree of flexibility to handle what life might throw your way. Let’s face it, things change – you must be able to adapt.