Understanding Financial Planning

The definition of financial planning is pretty simple to understand as it mainly 

explains it to be a definite process wherein people settle on target specific future 

financial objectives after a thorough assessment of their resources and assets so as 

to keep the targets realistic. Financial planning involves estimating one’s future 

financial needs and then making provisions or setting plans in progress in order to 

achieve these set monetary goals. Various factors such as estimating one’s insurance 

needs, managing one’s investments and managing daily cash flows are a part and 

parcel of this activity. Financial planning also involves numerous elements, such as 

asset allocation, risk management, retirement planning, tax planning and estate 

planning. Financial planning in essence is nothing but strategy generation to reach 

at a tailor-made solution for all your future financial needs and concerns with the 

additional benefit of future financial safety.

For people who want to get the most benefits from every dollar they earn, financial 

planning is a useful tool to achieve that objective. Careful financial planning can 

help individuals as well as couples to set themselves realistic priorities with 

regards to long-term financial goals and then get to work with the objective of 

achieving them. Financial planning also helps set aside some funds for contingencies 

and emergencies such as any income loss, injuries or illnesses.

Though financial planning is a structured activity, no two individuals look at it 

the same way, simply because most individuals have different objectives and 

different ideas for achieving them. While some individuals think of financial 

planning as way to selecting the right investments for post retirement security, 

others look at it as a means to finding investments that will help them generate 

enough savings to meet a future expense such as a child’s higher education expenses, 

etc.

Though financial planning as a definition may seem like a fairly easy task, it is 

not a job for everyone, especially people who lack financial market-related 

knowledge. Financial planning is also fairly complex as it is multi-disciplinary and 

hence is not a task for any layman. The best way to go about financial planning is 

to hire the services of a professional financial advisor or a financial planner. 

Financial planners are experts in their fields and they offer the right financial 

guidance and also give good advice when you are stuck on some financial planning 

issues. Also, with the advice of a financial planner, your financial planning task 

becomes fairly simple and there is no need to devote long hours from your already 

hectic lives, to study the market trends and follow new market instruments. A 

financial planner is a skilled expert who looks not only at all your future 

financial needs and objectives but also your current financial situation before 

giving out any advice. The advice or financial plan thus reached is best suited for 

the client’s present as well as future needs.

A detailed financial plan may include important aspects such as your investments 

portfolio, your retirement plan contributions, current living expenses budgeting and 

projected growth in savings. The problem with most people is that they delay their 

financial planning for too long, as they are busy juggling their current financial 

situations. This delay in preparing for the future is often a big blunder as 

irrespective of a person’s present income, financial planning can help in achieving 

future goals successfully. With the assistance of a financial planner you can get a 

reasonable financial plan that will require a little discipline but will help you 

with future success. As financial plans are not rigid or written in stone, a 

financial planner can easily accommodate any changes in your circumstances, such as 

the birth of child, and help you change your financial plan accordingly.