Financial planning helps you determine your short and long-term financial goals and create a balanced plan to meet those goals. Here are ten crucial reasons why financial planning will get you where you want to be with the help of an expert financial advisor.
Income: It’s possible to manage income more effectively through planning. Managing income helps you understand how much money you’ll need for tax payments, other monthly expenditures, and savings.
Cash Flow: Increase cash flows by carefully monitoring your spending patterns and expenses. Tax planning, prudent spending, and careful budgeting will help you keep more of your hard earned cash. Financial planners typically have software they can utilize to drill down every aspect of your cash flow needs and help you identify your strengths and weaknesses.
Capital: An increase in cash flow can lead to an increase in capital. When you increase capital, it can open up investment opportunities to improve your overall financial well-being.
Family Security: Providing for your family’s financial security is an important part of the financial planning process. Having the proper insurance coverage and policies in place can provide peace of mind for you and your loved ones. Ask yourself this question, “If something were to happen to me today, would my family be adequately covered?”
Investment: A true, comprehensive financial plan considers your personal circumstances, objectives, and risk tolerance. It acts as a guide in helping you move the needle through the investment process. So much goes into curating a well-diversified portfolio. A financial planner will be key in identifying the right types of investments to fit your needs, personality, and goals.
Standard of Living: A good financial plan will help you identify how much your expenses will be in retirement and how much you should save towards a retirement account annually to retain the same standard of living as you were accustomed to pre-retirement.
Financial Understanding: Better financial understanding can be achieved when measurable financial goals are set, the effects of decisions made are understood, and results are reviewed periodically. Financial plans are meant to move and evolve with you as you progress through different cycles in your life. When everything is laid out for you in one consolidated plan, it gives you a new outlook on how to approach your budget and improve control over your financial lifestyle.
Assets: A nice ‘cushion’ in the form of assets is ideal for everyone, but not everyone knows the most economically feasible way to obtain that ‘cushion’. Many assets come with liabilities attached, so it becomes important to determine the real value of an asset. The knowledge of settling or canceling the liabilities comes with the process of understanding your finances. The overall process helps build assets that don’t become a burden in the future.
Savings: It used to be called saving for a rainy day, but sudden financial changes have affected people across the board as recent crisis has bruised the economy, and probably your wallet. It is good to have some investments with high liquidity. For information on emergency savings, check out the Saving for an Emergency blog post from August.
Ongoing Advice: Establishing a relationship with a financial advisor you can trust is critical to achieving your goals. Your financial advisor will meet with you to assess your current financial circumstances and develop a comprehensive plan customized and tailored for you.
Legacy Financial Group is committed to educating and empowering consumers to make wise financial decisions. Click Here to contact us about putting together a comprehensive financial plan.
Source: eMoney Advisor