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| | What is financial planning ?
Financial planning is the process of meeting your life goals through the proper management of your finances. Financial planning helps you make advance provision for financial needs that will arise in the future. The objective of financial planning is to ensure that the right amount of money is available in the right hands at the right point in the future to achieve an individual's life goals.
What should a financial plan include ?
Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you save adequately to finance your child's higher education or it may provide enough for a comfortable retirement.
What if I don't achieve my goals?
Financial planning is a common sense approach to managing your finances to help reach your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that events beyond your control such as inflation or changes in the stock market or interest rates will affect your financial planning results.
How much should I be saving ?
It is hard to apply a rule of thumb toward savings, because it varies with age and income level. Ten percent is a good start. If you find that is too high for you, don't let that deter you. You can start by putting a little aside each month and then slowly increasing it.
What about taxes ?
It is important that financial plans are tax efficient. The financial plan should help you in minimizing your tax liability and also maximizing your after-tax returns from your investments. Some financial planners help their clients in preparing and filing their tax returns.
Why is there an evaluation of my insurance needs ?
Evaluating your insurance needs is part of personal financial planning. Insurance usually takes care of your unpredictable needs and as these needs can arise at anytime, insurance is extremely important.
After a plan is developed, what next ?
The best plan is useless unless it is put into action. Your financial planner will assist you completely in implementing the plan.
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