Financial Planning Explained
Financial planning is organizing how you manage money to achieve your life goals.
A financial plan is a comprehensive overview of your financial goals and the steps you need to take to achieve them. Since everyone’s financial situation is unique, every financial plan will look a bit different. However, almost all plans will include your financial and life goals, an analysis of the current state of your finances, projections of your future wealth and a road map to how you’ll achieve the goals you’ve set.
One of the purposes of your financial plan is to give you an idea of if you’re on track to meet your goals or if you need to make adjustments to your spending. Financial plans stretch over years, preparing you for the long term. Whether you’re looking at estate planning, savings planning or family planning, it should be in your financial plan. Through small steps, like having a monthly savings goal or investing your money, your financial plan can lead to much better preparation for your future.
The plan should be flexible, too, to allow for life changes like marriage or a new job as well as any unexpected situations like hospital stays. If you don’t already have one, a financial plan should allow for the creation of an emergency fund to handle whatever life may throw your way.
A lot of thought and calculations go into making a financial plan. If you find it too much to do on your own, you might want to consider working with a licensed financial advisor. They have the financial planning expertise to assess your situation and help you create a plan to achieve your goals. They also provide you with an objective viewpoint and can give you honest recommendations.