Financial Planning

Real Estate Agent with keller Williams Fox Realty

The New Year is just around the corner and what a better time that the beginning of the year to set your financial goals for a new year. Financial planning is " the process of meeting your life goals through the proper management of your finances", says the Certified Financial Planning Board of Standards, an independent group that licenses certified financial planners. This is done by "gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans," the board says.

There's the rub. a lot of people don't have a strategy or plan or, in many cases, a goal. Without a clear and measurable goal, it's impossible to come up with a plan to achieve it. " I want to be rich" is not a goal. It's a wish. " I want to save $30.000 over the next ten years" is, and one you can measure. Within this context, you can set intermediate goals: For example, save $3,000 after one year. Reader mail and other anecdotal evidence suggest few people think them through, and even fewer write them down, which forces you to spell them out more clearly and strengthens your commitment to them.

The financial planning process should include six steps, according to the Board of Standards:

  • Establishing and defining the client-planner relationship
  • Gathering personal financial information and goals
  • Analyzing and evaluating personal financial status
  • Developing and presenting recommendations and/or alternatives, which may cover the gamut from savings, spending, budgeting, investments, insurance and tax and estate planning, among many areas.
  • Implementing the recommendations
  • Monitoring one's programs towards the goals

For many useful tips on financial planning , vist FPAforfinancial planning .org