What is Financial Planning?
It is the process of meeting your life goals though implementation and proper management of your finances. Life goals can be purchasing a home, car, boat, saving for education, and retirement. Financial planning helps you look at the big picture and shows you the best way to get there.
Benefits to Financial Planning:
Financial planning allows you to take control and sit in the driver seat. It is a process where you direct where your money is going and take accountability for your financial decisions. Each decision you make can affect your big picture. For example, if you decide to try and pay off your mortgage faster, it may prevent you from putting more money into your retirement plan. Part of the financial planning program is to look at short and long term goals. It is important to review them with your planner to stay focused on your goals.
Can I do my own financial planning?
The answer is yes. We recommend that you participate in creating your plan but by allowing someone to monitor your goals, you will be less likely to go off course. Think of who uses a coach. The most successful people in their fields have a coach - think Tiger Woods! Your PEPP professional consultants are like your own personal financial coaching team.
During the review process, your financial planner will be able to evaluate your portfolio, investments, insurances, etc., and know if any changes need to be made. This review is crucial for your overall budget. Many people do not realize that investments are variable and changing all the time. If you are not in a position to learn about your investments and monitor them, having a financial planner is money well spent.
Who are financial planners?
Financial planners are agents that provide you with general financial planning services. Many of these agents hold licenses that allow them to buy and sell products that will be part of your planning needs. Other planners are not licensed but make recommendations. Some of the most common financial planners are: CPA’s, Estate Planners, CFP’s, Insurance Agents, Investment Advisors, and Stockbrokers.
The Steps of Financial Planning:
A. Establishing the client-planner relationship
B. Gathering client data and goals
C. Analyzing and evaluating financial position
D. Developing a plan
E. Implementing the plan
F. Monitoring the recommendations
How to Make Financial Planning work for you:
A. Set goals
B. Understand the effects of your decision making
C. Re-evaluate your goals each year
D. Start planning as soon as possible
E. Be realistic
F. Know that you are in charge