Benefits of Financial Planning
by william_lako
 Money Talks Blog
July 08, 2013 09:04 AM | 1253 views | 0 0 comments | 19 19 recommendations | email to a friend | print | permalink

Midyear is a great time to assess your financial needs and set achievable goals for your financial future. One way to accomplish this is to develop a financial plan. Most people have similar goals: to be financially secure throughout their lifetime; to be able to retire when they want to, and to be able to send their children to college. Yet, emergencies and financial crises can divert us from working toward those desired ends. Financial planning is a process in which you determine what you want to achieve in life and how best to do it with the money you have and will earn.

Diligent financial planning can help you achieve your goals by taking into account all the varied financial aspects of a person's life: taxes, insurance, retirement, budgeting, estate planning and life goals. It looks at the various—and sometimes competing—aspects of life and develops strategies and objectives that make those parts work together efficiently. With a plan, you should be able to determine what is achievable based on your current lifestyle and what type of changes you might need to make in order to reach your goals.

Do You Need Financial Planning?

Everyone can benefit from financial planning regardless of whether you go at it alone or hire a professional. Identifying what you want to accomplish and creating a strategy to achieve it can greatly increase your chances of reaching that goal. Many people are under the misconception that financial planning requires substantial wealth and complex lifetime goals. Additionally, most people have their assets in various places such as their home and belongings, retirement plans, brokerage accounts, even real estate or businesses. It takes financial planning to pull it all together to make it work in the most efficient way possible. Ideally, any important financial decision you make should be done in the context of your overall financial needs and situation.

Most people react to events rather than design a plan for the distant future. Financial planning is proactive because it provides a way for you to gain control over your assets before you need them. For example, think about your own retirement. Nowadays, people live well past retirement age—chances are you will live at least 20 years after you retire. A higher education is commonplace now, rather than the exception. With the cost of college increasing between 5% and 7% per year and increasing health care costs, coupled with our increased longevity, it is possible that you will find yourself paying for your children's education at the same time as you need to be saving for your own retirement.

How Can Financial Planning Benefit Me?

A financial plan should give you a clear picture of where you stand financially and can develop an improved awareness of financial choices. It can provide discipline and direction for how you spend your money so you will be less likely to purchase investments on impulse or follow advice that was not designed specifically for you. By going through the financial planning process, you and your family can establish measurable goals that can be compared to actual results.

It is important to understand a financial plan is not an absolute guarantee of a successful financial future. However, the more you plan, the better you should become at easing the anxiety that financial uncertainty can create.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

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