Financial Planning 101
So you are ready to plan for your financial future but don't know where to begin. You don't even know what financial planning is. Where do you start? Do you need to hire someone? Do you need to be wealthy to even consider it?
The fact is no, you do not need to be Donald Trump. You just need to be motivated to prepare for the future. You may need a little bit of capital, but your financial planner will help you with all of that. And yes, you will more than likely need to seek
From an expert. You are going to want to. Preparing for having money in your retirement age is a serious undertaking and you want it to be done properly. This article is going to give you a step by step guide to the financial planning process. This will give you a better guide of what to expect when you seek out your financial advice from an expert.
Financial planning is an ongoing process that requires several steps. The end result will be your financial plan. Do not expect this plan to be set in stone. You will experience life along the way and with that comes medical expenses, job loss, goal changes, and well, life. Keeping a solid relationship with your financial planner will help ensure you can sail through these bumps.
When you seek financial advice, your financial planning will start with determining what your financial personality profile looks like. Financial planning begins with determining your net worth which is what is left over after your liabilities are subtracted from your assets. Your financial planning will then take into account your current income, lifestyle, risk tolerance, current financial responsibilities, and financial resources. From this a financial profile will then be created for you as the first major step in the financial planning process. Once you have your financial planning profile, you will get financial advice based on your needs assessment. This is going to basically determine what your needs are to maintain your current lifestyle, AND prepare for retirement at the same time. This will consist of your debt obligations, housing expenses, recurring expenses (such as a car payment), and other monthly bills.
The combination of these two profiles will help your planner establish your cash flow analysis – what you have coming in, what you have going out, what you need to save. Your financial planning journey will then determine what your goals and objectives are for the future. This will include whatever it is you are preparing for – retirement, estate planning, vacations, college funding, or whatever it is you are planning for. Knowing these goals ahead of time is key to your financial planning success. When you have discovered where you are, what you have, and where you want to be, your financial plan will fall into place.
Your planner will give you financial advice on an individual plan that is meaningful to you. The following financial goals may be established, and SHOULD be discussed with your planner: emergency fund, insurance, tax planning, debt management, savings plan, retirement planning, and estate planning. It is not necessary to take a bit out of each cookie right now, but at least making yourself aware of these things will make your financial planning process that much easier.
You financial planners are going to be a group of experts that comprise a team. Each of which you will use at different stages of your life, and throughout your financial planning process. Each area of expertise requires a specialist in the field. And if you are considering more than one of the financial goals listed above, it is a good idea to consult more than one financial planning expert. Examples of these include tax planning through a certified accountant, estate planning through an attorney, insurance companies and agents to handle your insurance needs, debt consolidation experts to handle your debt management, a financial investor to be in control of your investments. It is unlikely you will use each of these experts simultaneously, but if you want sound financial planning, you will use more than one or each of these experts throughout your financial planning process.
Each financial plan is as unique as the individual that controls it. Some use a variety of professionals, others do not. Either way, proper financial planning will put you on the path to retirement success.
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