subject: A Primer on Financial Planning? [print this page] A Primer on Financial Planning? A Primer on Financial Planning?
Financial planning can be defined as the systematic planning of a financial budget with focus on spending and future income saving. Through a financial plan, future income is allocated appropriately for different kinds of expenses that may be incurred by an individual or company, while at the same time reserving a portion for short and long-term savings. The professional who is primarily responsible for planning your finances is called a financial planner. His main job is to aid clients in maximizing his current fiscal resources, using financial tools in achieving financial objectives.
There are many variations in the definition of financial planning. This is because the term has different meanings to different people. For one person, it may mean having the resources for an early retirement while for another; it may mean having enough investments and savings to provide for the college education of his children. Some financial decisions may even involve selecting the appropriate insurance packages as well as changes in career.
Three main components make up the financial planning equation. These are:
Financial Goals or FG
Financial Tools or FT
Financial Resources or FR
Who Should Plan his Personal Finance?
Everybody should learn how to plan out his finances to avoid financial ruin in the future. You need to have all the correct advice on your finances so that you will be able to make the right decisions that will allow you to survive if life throws you a tough one. With careful planning, you will be able to set priorities and gradually work your way towards your long-term goals. In addition, having a financial plan would give you the resources you need in case of unexpected loss of employment or illness.
Doing it yourself
Although having the services of a financial planner will make the job of planning your personal finance easier, it is not a necessity. You can do the task well on your own. If you have no experience in it or you think that you are doing a lousy job, you can make use of software, books and other tools that will aid in individual planning. In addition, there is a huge amount of information that is available on the internet.
If you think you really need to have a professional do the planning for you, consider some things first such as your financial worth, your future goals and the amount of research that you could do to justify the money that you will spend on professional financial planning.
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