What is financial planning?

Financial planning is the concerted and consistent implementation of a strategized plan for your current and future financial wellbeing and the fiscal fortitude of your family during and after your life.

You can make an official financial plan with or without a professional financial advisor, but it is always helpful to have someone trained in the field of finance to guide you toward the best possible use for every dollar you make.

Financial planning is largely about learning to make your money work for you rather than living paycheck to paycheck. Establishing investments, estate wills and retirement accounts all fall under the category of financial planning, as does creating a workable, realistic budget that allows you and your family to live comfortably but save meticulously. Following a few basic steps can help make financial planning for the unique needs of your family easy and tailored to your best financial future.

Organize Short-Term and Long-Term Financial Goals

One of the most important first steps to proper financial planning is to write down your established short-term and long-term financial goals. Speak openly and pointedly to the members of your family about financial planning and work together toward your shared goals. Everyone in the family, including children, benefit from financial planning and thus everyone should be made aware of what the collective plans are.

Think about considerations such as orthodontic or other medical needs for the children, college funds, any upcoming surgeries you know you must have, trips you want to take, retirement dreams and even plans for building that deck onto the back of the house next year. Nothing is too small or too large to be included in effective financial planning. In fact, the more detailed and specific you can be about your overarching fiscal goals, the easier it will be for you or your hired financial advisor to create a budget that works toward your desired results.

It is vital to weigh in possibilities for unseen illnesses or disabilities, unpredictable expenses such as perhaps a new roof after storm damage and even possible early death. None of this part of the financial planning process is meant to be morbid or depressing but merely to set up a system of protection for your loved ones in the event of a catastrophe or simply the unexplained turns that any life can take at any time. Many people do not realize that their health insurance, life insurance and disability insurance are all aspects of life that you or your financial advisor need to account and plan for when creating a strong financial plan.

Measuring Assets and Liabilities

A good financial advisor is going to tally your debts and assets as the very first step to generating a picture of your budgetary habits and needs. Where are you spending too much money? Are you saving enough? Are there places in your budget that could be tuned up for better money performance? Many people believe that creating an official itemized budget will feel too constrictive or limit their enjoyment of life, but the opposite is actually true. If you are overspending or not making the most of every dollar, then you are effectively restricting yourself from your own long-term financial goals and dreams.

Your financial advisor may encourage you to make small daily lifestyle changes for the benefit of very large later-life returns. For example, giving up a $4.00 coffee twice a week can mean being able to pay off outstanding debt faster and then pay cash for that boat you have always wanted years before you thought you could have it. That is why your goals and habits are just some of the things you should discuss with your financial planner.

Putting the majority of your savings into high interest-earning stocks rather than leaving it sitting in lower-interest accounts can be the difference between your children going to college debt-free or not. Successful financial planning is all about recognizing the tiny changes you can adopt in your day-to-day financial habits that lead to monumental fiscal gain over the course of the bigger picture.

Be Realistic About Your Current Financial Picture

Naturally, most people want to accrue as much financial wealth as possible in a lifetime to ensure a stable and comfortable life for their descendants as well as to aid in the realization of long-term goals. While it is imperative to keep your eye on the big picture of your financial future, at the same time you must also keep both feet firmly planted on the ground with regard to where you are financially at this current moment. It is not feasible, for example, to write budgetary plans based on salaries you have not secured yet (even if they are forecast), the debt you have yet to pay off or assets you have not gotten around to liquidating.


Anything can change in a day and what you thought maybe might not become its outcome at all. Markets change, value increases and decreases with the surges and lulls of demand, and none of these factors are predictable by you or your financial advisor. For this reason, a good financial planner will instruct you on how to build budget plans for achieving your goals based on the salary, debts and assets that you currently possess, nothing more or less. You cannot responsibly bank on expected inheritances, the future sale of property or stocks, raises or tax windfalls. However, you can make solid plans with money you already have in the bank. Take a hard look at your savings and have your wealth management advisor find the best way to invest it with the shortest and highest returns.

The Importance of a Financial Planning Roadmap

Simply writing responsible and achievable budgetary goals is not enough if you want to grow your wealth, secure your family’s future and live out your best fiscal life. Equally as important is the necessity of creating a structured roadmap from where you are now to where you want to get, with applicable time frames. Sit down with your financial advisor and talk about where you want to be in the next two years, five years, 10 years, 25 years and on. Then, articulate really specific steps that you will take to meet those deadlines.

Just like with New Year’s resolutions, financial plans mean nothing if you just create them, talk about them once and then file them away to be forgotten. Think of your budgetary plans as an active document that you reference at least once a week if not once a day. Measure your continued progress in fun ways with your family, maybe with a personalized pie chart or a colored graph. Your financial planning advisor can help you create these documents in ways that are useful to your family’s specific needs. Keep copies of yearly goals in highly visible communal spaces within your home so that all members of your family are held equally accountable for living up to the challenge and the effort begins to feel more like a fun team event rather than a tiresome chore. Remember that the end goal of financial planning is to better your life and the lives of your loved ones. Approach your financial planning with honesty, creativity and commitment for maximum benefits now and in the future.


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