Financial Planning, Financial Planner, Financial Plan

By: EconomyWatch   Date: 23 November 2010

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Financial planning is the process of making informed money management decisions in order to secure your future. Financial planning helps to achieve financial goals and meet personal priorities, taking into consideration available resources, responsibilities, risk appetite and lifestyle. A financial plan lays down the allocation of savings across various asset classes to achieve an appropriate risk-reward balance.

Financial planning may include:

  • Asset allocation
  • Investment planning
  • Retirement planning
  • Insurance planning

    • Financial Planning: Steps

    Financial planning helps to translate your personal objectives into specific plans and outlines strategies to implement these plans. The process of financial planning comprises of the following steps:

    • Laying down financial goals and objectives: The first step is to identify your objectives. This may include children’s education, the age at which you would retire, the lifestyle you would like to have in the future and what you would like to leave behind for your spouse and dependents.

    • Gathering data: You need to accumulate data such as your income level, tax returns, insurance policies, trusts, estate planning documents, investments and real estate. The more detailed information you can gather, the more accurate your financial plan will be.

    • Analysis of data: This step involves considering various alternatives to meet your financial goals and objectives.

    • Adopting and implementing a financial plan: The next thing to do is to formulate strategies that best meet your financial goals and putting this plan into action.

    • Monitoring the financial plan: It is important to revisit your goals, strategies and plan at regular intervals.

    Financial Planner

    A financial planner helps people find a path to their financial goals and understand the impact of their financial decisions. Ensure that the financial planner you hire is qualified from a certified board in his/her country. The US requires a planner to obtain certification from the Certified Financial Planner Board of Standards to become a Certified Financial Planner (CFP). In Canada, it is the Financial Planners Standards Council that grants the certificate.

    A comprehensive financial plan can protect you from unforeseen, unfavorable situations. It may prevent you from falling into a financial hole and ensure that your financial health is sound even after retirement.


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