The goal of financial planning is to help define and achieve life goals through effective management of finances and risk. Financial planning is a process, not a product. You will never “finish” planning for your future. Why? Because things change. People get married, have children, inherit estates, change careers, change goals, the economic climate changes, tax rules change, everything changes. Your financial plan should be reviewed when significant life changes occur and at least annually.
With financial planning, the result is vastly greater than the sum of its parts. A solid financial plan will take every aspect of the person and their assets into consideration. Everyone has unique needs, risk tolerances, goals, principles, and personalities that need to be considered. Financial Planning includes investments, retirement accounts, money management, insurance, estates, taxes and funding of educational goals. None of these areas stand alone; each has a relationship to another that must be at least considered.
A good financial plan may not include every one of these areas. A good financial plan will at least consider each area and take the appropriate action.
Financial Planning Steps:
- Establish goals.
- Gather applicable data.
- Analyze data and evaluate current financial situation.
- Develop plan.
- Implement plan.
- Plan is monitored and reviewed at least annually. Adjustments are made as required.