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. By viewing each financial decision as part of the whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.
Introduction to Financial Planning
Financial Planning is an ongoing process to help you make sensible decisions about money that can help you achieve your goals in life. In other works, financial planning is a systematic approach whereby the financial planner /adviser helps the customer to maximize his existing financial resources by utilizing financial tools to achieve his financial goals.
Financial planning is about the process of meeting once life goals through proper management of one's finances. Life goals can include buying a home, saving for child's education or planning for retirement. It is a process that consists of specific steps that help one to take a big-picture look at where you are financially. Using these steps one can work out where he are now, what he may need in the future and what he must do to reach his goals.
In mathematics terms, financial planning can be described with three major components:
- Financial Resources – FR
- Financial Tools – FT
- Financial Goals – FG
Financial Planning Process
Financial planning, especially at an early age can help to give your life focus and help you to achieve your goals in life. Financial planning gives you a set of tools to create wealth and build up a nest egg that you can use in case of emergency. Financial planning also gives you direction, direction you need to make informed decisions about investments so that you won't make any mistakes and you can reap the benefits for the rest of your life.
