Many people leave their personal financial planning goals and advice up to a professional financial planner or financial adviser. While it’s always best to seek professional advice before making major decisions that could affect your future, it’s also a good idea to learn a bit about implementing some goals and plans of your own.
What is Personal Financial Planning?
Personal financial planning is about dealing with several different financial issues by using proper planning to achieve a desired outcome for your financial goals. In most cases, this kind of work is carried out by a personal financial planner.
Some of the strategies included in a detailed financial plan include cash flow management, debt management, risk management, retirement planning, investment advice and planning, estate planning, and asset protection.
Creating a Personal Financial Planning Strategy
Before you can develop your own strategy for the future of your finances, you’ll need to sit down and create a long term goal or set of goals. This is where annual financial checkup forms can be a great help to you. Your individual desired outcome will usually be different to anyone else’s, so it’s important you consider carefully what’s important for you and your family.
Creating a strategy to manage your cash flow and your debt levels more proactively is usually a healthy place to begin, as you’ll find you often have far more disposable income to work with once your consumer debts are under control. Effective tax planning strategies are also a key in making sure your cash flow is as structured as possible and preventing financial planning mistakes.
From here, factoring in your long term investing goals, such as building up retirement savings or developing an investment portfolio to provide further income becomes important. Asset protection and risk management are also crucial steps to consider once your investments start to increase.
You need to be realistic about what goals you want to set for your future, as it will become much easier to put the steps in place to get you to your desired outcome.
Prioritizing Your Financial Plan
There’s no point building up your asset base and your retirement savings if you haven’t effectively managed your current debt levels and personal cash flow properly. By learning simple tactics that can reduce the amount of tax you pay and reduce the amount you pay on personal debt repayments, you can increase your available cash flow.
This gives you more available income to put towards achieving your wealth creation and savings goals for other aspects of your total personal financial planning strategy.
In order to make sure you reach the goals you’ve set for your future, a financial plan should incorporate ways to help you work towards the outcome you want. Sometimes this can mean learning to put aside some of your regular income now so that you can benefit from it in the future. Many people cringe at this idea, but there are plenty of benefits to allocating your money to create a stronger financial future now.
Putting Your Financial Plan into Practice
There’s no point creating a plan if you don’t intend to take the steps necessary to make it a reality. The strategies you outlined in your financial plan should include various aspects of budgeting, saving, debt management and regular investing.
Once your plan is created, it’s then up to you to follow through on the steps put in place within the plan to see that you’re making the most of your own income while you can.
If you find that you’re not always as disciplined as you’d like, it’s possible to set up automated direct debit agreements with many lenders, banks and credit companies to make the payments into your savings accounts or off your debt repayments automatically when you get paid. The same principle is true of your retirement savings plan and your insurance payments.
You might even find that it’s possible to invest small amounts of money, from as little as $100 a month, into mutual funds by automated direct debit agreement with some companies. This can help you to continue growing your investment portfolio on a regular basis without having to worry about remembering when to deposit funds.
Finding a Professional Financial Planner to Help You
In most cases, financial planners are paid a commission for recommending various investment and financial products designed to help you achieve your goals. These can include various insurances, mutual funds, bonds, REITs and other investment options.
When you’re trying to find the right financial planner to deal with the precious asset of your future personal financial planning, it’s important to verify that your planner is keen to work to achieve your own goals and not to pad his own commission check.
In America, your financial planner should be registered and licensed as an investment advisor. Make appointments with several financial planners and discuss what you want to try and achieve with your goals. Ask about their qualifications and previous experience and check that they’re willing to use a wide range of financial products to suit your personal needs, not just those that pay the highest commission amounts. Financial planners will also have long list of contacts like investment advisors, lawyers, inheritance planning professionals and more.
By the end of the process, you will already know which planner or advisor you prefer working with, so it becomes much easier to choose one to work with for your long term future. Personal financial planning doesn’t have to be difficult, but it does begin with creating a plan for what you want to achieve.