Sign Up | Log In
First, I would like to offer a definition of financial planning. I could not agree more with the Financial Planning Association’s definition. It states, “Financial planning is the long-term process of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life. Remember, financial planning is a process, not a product.” Wordy, but well said.
Thus, if the result of quality financial planning is that you may be able to achieve your goals and dreams, the importance of financial planning could not be overstated.
Financial planning is not about finding the “best growth mutual funds” or the identifying the “best gold index funds”. Yes, of course financial planning includes investing issues. But it also includes 529 saving plans, health savings account issues, early retirement strategies, simple IRA contribution limits, identifying state capital gains tax rates, securing high quality tax and legal advice, locating affordable life insurance, budgeting living expenses, and finding an experienced financial planner to lead you through it all.
The point is that financial planning consists of not only all of the nuts and bolts of all types of personal financial issues, financial planning weaves these issues together so that the end result may be realized, which as stated above, is to achieve your goals and dreams.
There is one issue, however, that financial advisors and financial planners cannot control, at least not to any significant degree. That is the issue of human nature.
You see, advisors can master all types of financial issues. We can (and do) continually educate ourselves on an unbelievably broad range of financial issues. We can (and do) acquire a litany of degrees and designations. However, the overall result to any significant degree will always depend on the actions of the client. At some point the individual who needs financial planning has to become aware of his/her need, then followed by the steps in the direction to satisfy that need.
Also, needs change. What was once true for a couple in their early thirties, may not be true at all of a couple in their late forties. Family configuration is always evolving, as are families’ goals and dreams. Financial planning is never a static decision made in time, but a plan that must allow for moving parts and changing times. As stated above, financial planning is a process, not a product.
Unemployment is up, and the dollar is down. The global financial situation is shaky at best. Social security is unsecure, and who knows what health care will look like in ten years. Regardless, individuals will have to either work harder or plan better to reach their goals, whatever they are. All of this has made this discipline of even greater importance.
Finally, let’s offer a few bullets that will get you started in the right direction.
This article and these bullets are not exhaustive, but maybe you have learned a little about the importance of financial planning.
Let 401kFundAdvice become a part of your financial plan today!