Financial Planning

Financial Planning-Basics Steps To Getting Started

2011-08-07T10:43:00.000-07:00

Financial planning comprises of two main elements -

The financial strategy (or plan), and the investment strategy. The financial strategy looks at wealth creation, debt management and retirement planning, while the investment strategy examines asset allocation and investment selection.

Regardless of the scope of the Financial Plan the process includes six basic steps. These are illustrated below.

1. Gather all the facts

You need to put together an accurate picture of your financial situation including the assessment of your investment and risk profile, which can range from conservative to aggressive. Work out your monthly cash flow.

2. Set financial goals

Write down your short, medium and long term income requirements, expenditure estimates, as well as identify any other personal and business needs.

In the grand scheme of things money is not that important. What is important about money is that it enables you to enjoy the things which are important to you.

3. Identify options

By taking advice from a fee based indpendent financial planner, they should be able to identify a variety of financial strategies and investment vehicles that fit your investment and risk profile. After analysing information on all the available options, they will then develop the most appropriate financial strategy for your objectives.

All necessary documentation, product application forms, etc, are completed. All the elements that form the recommended plan are actioned.

4. Portfolio and Plan review

Your portfolio and plan should be reviewed on a regular basis. This can be discussed with the indpendent financial planner. As your needs and circumstances change, a review of your plan can identify whether changes are required to your portfolio.

5. Implementation of final plan

A draft plan is then prepared incorporating the advice, recommendations and reasoning for proposed actions, including a full disclosure of costs, to meet your specific financial goals and objectives. This plan is then reviewed by you and modified where necessary. A final plan should then be agreed.

6. Ongoing Review and Management

Financial planning is an ongoing process. The preparation and implementation of the recommendations arising from the plan is only the start of the financial planning relationship.

On an ongoing basis, your investments and investment structures must be regularly reviewed with regard to your situation, goals and objectives to ensure that they remain appropriate.

Often strategies must be adjusted to make allowance for changes in your circumstances and goals. Essentially a plan will grow with you and your goals for the future.

Our economic environment, government rules and regulations and your personal situation will continually change over time.

The ongoing review and management of your finances will enable adjustments to be made to your strategy where necessary to keep your portfolio on track to meet your goals and objectives.

Turbocharged Financial Planning

2011-08-06T10:41:00.000-07:00

Financial planning is an ongoing process individuals and businesses should implement by organizing all aspects of their finances. This will assist in identifying financial goals, providing a comprehensive written Financial Plan, and implementing the plan in accordance with the objectives that are most important to you.

Comprehensive financial planning should involve these areas and these specific questions.

ESTATE PLANNING

*How can you accumulate a sizable estate to pass on as a family legacy?

*How will your hard-earned assets be distributed after your death?

*How can you minimize federal estate taxes and state inheritance taxes?

*How can you best provide for your surviving spouse and children?

*Whom do you want to carry out your wishes?

RETIREMENT PLANNING

*How can you accumulate enough in retirement savings and pension benefits to enjoy a comfortable retirement free of financial worry and not be a burden to your family?

*How much (or little) can you expect to receive from Social Security?

*How can you coordinate your IRA, 401k, pension, Social Security, and other retirement benefits for maximum effectiveness?

*At what age can you really afford to retire, especially if you have children to send to college?

TAX PLANNING

*Are you taking full advantage of the tax laws so that you are not paying more than necessary?

*Are there changes you could make in your business structure that would reduce your income taxes?

*Do you have access to changes in tax law that affect you?

RISK MANAGEMENT

*How are you protected against the unpleasant and potentially catastrophic losses associated with natural disasters, illness or accident, disability, property loss, personal liability, and premature death?

*Is your business protected against these potential losses?

*How would your business be affected if your key people were no longer able to function?

INVESTMENT STRATEGY

*Do you really have a structured investment strategy or do you just invest haphazardly in the latest investment fad?

*Do you know how to increase your investment returns and lower your investment risk through the use of the principles of the Modern Portfolio Theory of Asset Allocation?

*Is your asset mix appropriate for your short-term needs as well as your long-term goals?

*Do you adjust your investment strategy as your investment objectives change?

*Are your investments effectively overcoming the ravages of inflation and taxation?

*Do your investments accurately reflect your risk/reward profile?

Answers to these questions should be incorporated into a customized personal financial plan tailor made just for you.

A Financial Plan is specific to your unique needs and will include the following:

*Current and projected financial statements

*"What if" scenarios with different assumptionsv
*Cash flow objectives

*Retirement goals and tax-efficient ways to achieve them

*Funding children's education

*Protecting against the financial impact of premature death or disability

*Implementation schedule with a time frame to follow.

Expect this process to be an eye-opening experience. You should be able to see all the disparate areas of your financial life come together into a comprehensive, meaningful, integrated whole.

All parts will work together like a well-oiled machine. You will see exactly where you are now, where you want to go, and most importantly, how to get there. Any obstacles you face will be clearly identified.

Your personal financial plan is a living document that should be reviewed on a regular schedule and altered to meet your changing circumstances.

Developing your financial plan is only the first step in a life-long process of wealth accumulation and financial security.

Investing Without Financial Plan and Goals

2011-08-05T10:39:00.000-07:00

In times of plenty, we seek safe haven for surplus cash that will generate passive income for the future. In times of need, some of us take desperate steps to increase our money supply to meet the demands of the day. Both actions necessitate investment decisions, decisions that many of us are oftentimes not qualified nor experienced to make wisely without help. Thus, begs the need to know the answers to the four "wives" (why, when, where, who) and one "husband" (how) questions with respect to investing and financial planning. This article will discuss the two most important pre-requisites to making wise investments.

As a licenced financial planner and a business and financial advisor to small and medium companies, I am often asked to give investment tips or advice. Whether I am a fantastic investment guru or tipster or not is immaterial as I would always avoid answering such questions without knowing and understanding the financial background, status and financial goals of the questioner. This article is not intended to be a primer in investing or financial planning as one can select a book on the subject in any good high street or online bookstore. Rather, I would like to share what I consider to be the top two amongst the many pre-requisites an investor should consider before making an investment decision.

1. Have a Financial Plan with SMART goals

Planning in general is an activity we engage in all the time - planning for a holiday, planning for a wedding, or planning for any other event or planning to achieve a particular objective. However, how many of us really get involved in developing a truly comprehensive personal financial plan and implement the same? If not, why not?

The Certified Financial Planner Board of Standards, Inc (CFPBSI) defines financial planning as "the process of meeting your life goals through the proper management of your finances". Life goals are goals dear to us that we would like see come to pass, especially during our lifetime. Such goals can be as simple as saving to buy a car or for a cruise around the world, or a bit more challenging in investing to mitigate the effects of inflation in planning for retirement.

In goal setting, it is imperative that we be rational and do not set goals that will be too difficult to achieve in the timeframe required else we can be truly discouraged and discard the plan altogether. Thus, it is good to follow the SMART principle, taught in Management 101, which states that our goals should be Specific (say, save to buy our particular dream car), Measurable (say, save $50,000 to buy a car), Achievable (say, plan to buy a car costing a sum we can afford), Realistic (as in planning to buy a car and not a trip to the moon although it can come true for some), and Timely (say, achievable within a reasonable time period).

Knowing our SMART financial goals will enable us to plan how to achieve them. If we are not sure how to develop a financial plan that is workable for us, we can seek the services of a financial planner. A point to note is to ensure that we consult a financial planner that is adequately qualified (say, having the CFPBSI's Certified Financial Planner certification that is recognized worldwide) and experienced (and perhaps licenced to practice as a financial planner by the appropriate authorities to ensure accountability and ethical behavior).

2. Understand your personal financial risk profile

Prior to making any investment decisions, it is necessary that we understand ourselves in relation to our individual financial risk profile. All of us take risks in our daily lives and these could include crossing a busy street, or taking a flight somewhere, or even getting married considering the increasing number of separations/divorces. It is important to note that different people have different thresholds in the level of risk they are willing to take for any number of reasons.

Assuming a risk that we are not prepared or capable to cope with may result in adverse consequences and detrimental to our health. Similarly, the level of financial risk we are willing to assume or can tolerate should be carefully evaluated and such an exercise will normally be based on a set of criteria relevant to each individual. In addition, the risk profile of an individual can change as his or her personal status changes and it is generally accepted that a younger person can assume a higher financial risk compared to a person nearing retirement as the former has time to accumulate or recoup losses due to investment decisions not realizing their desired potential.

Thus, it is wise to understand our financial risk appetite and risk profile so that the investment decisions we make will commensurate with our risk profile. Investment opportunities abound in the marketplace for all risk profile types, whether one is considered a conservative or can take high risk.

In summary, the above are what I consider the two essential pre-requisites to investing and the others mainly pertain to details in understanding investing, investment strategies, and investment opportunities that can be found in any good investment text books or articles, advice from investment professionals or financial planners, or perhaps can be the subject of a follow-up article by this writer. A last piece of advice is to re-emphasise the fact that we should not make any investment decisions that can adversely impact our financial well-being until we have a sound financial plan, and if professional advice is required, do always consult a qualified and licenced financial planner to help develop one's personal financial plan. Always remember this well-known adage - FAILING TO PLAN IS PLANNING TO FAIL.

The 3 Concerns of a Financial Plan

2011-08-04T10:37:00.000-07:00

Step by step planning towards achieving financial goals forms the very essence of creating an efficient and effective financial plan. Defining a brief outline for a financial plan requires addressing certain concerns like Achieving flexibility, liquidity and tax minimization Achieving Flexibility. Developing or creating a financial plan requires deep understanding of your personal and financial goals. Financial goals are situation specific and may vary individual to individual. The goals pertaining to an individual may change or vary relative to prevailing situations in your life. For example, events such as births, deaths, illnesses, and marriage can affect your goals profoundly. Other factors like change in employment, inflation, investments and results, and miscellaneous factors will also affect your financial circumstances. Therefore creating or making plans which are unresponsive to change should be avoided. Flexibility thus plays an important role towards creating a plan suitable for changes in your life. This can also be considered as customizing a plan for an individual with respect to several variable factors, these factors in turn define the development of a financial plan.

Liquidity. Adequate liquidity is another area of concern which requires to be addressed before the process of financial plan development starts. Liquidity is, particularly important for handling situations classified as financial emergencies in particular if we consider the advice of financial advisors who recommend that setting aside funds equivalent for a period of 3 to 6 months of an individual's expense. Appropriate locations for these funds are savings, and money market accounts or a standby line of credit to accomplish the same level of liquidity. The important part here is to ensure quick and easy access to money in order to avert or address critical situations. Liquidity: the characteristic of an asset that can be converted readily to cash without loss of principal.

Tax Minimization:
Finally, it all boils down to addressing an issue of minimizing taxes. Considering that one of the prime objectives of developing a financial plan to save taxes, tax minimization automatically becomes one of the concerns which is to be addressed. However, an effective financial plan will automatically cater your income tax concerns if designed keeping in mind the step by step approach of developing a financial plan.

The first step

There are several ways in which you can proceed.

1. Financial planning software:
Using a financial planning program on your computer is one of the easiest way to develop a financial plan. A software of this sort can streamline the process in the long run, although it requires an effort initially to enter data.
2. Another way which is by far the simplest and the most easiest method to date is using the pen and paper mode of developing a financial plan.

Things to consider

One of the most important thing is to determine how to meet your goals. Once you have a direction all you need to do now is to simply follow the route. through. You should also create a plan for your intermediate- and long-term goals. Here, again, try to stay flexible. If anything, the need for flexibility increases as your time horizon recedes; you'll have less control over distant events. Remember, too, that the most carefully constructed plan will be worthless unless you actually go ahead and implement it. Keep a record of each action step, including when and how it was accomplished. Be patient-implementing your plan can be a time-consuming process. Your personal situation will dictate whether you decide to proceed with or without professional help. Most people will benefit from assistance at some point, at least in implementing their plan. (See the final section of this chapter for guidelines and suggestions on choosing a financial planner.)

Benefits Of Financial Planning

2011-08-03T10:36:00.000-07:00

Most of us are aware of the term 'Financial Planning' but only a few of us are able to understand the real meaning of the term. Financial planning actually involves a formal process which includes constructing the perfect way for financial goals and objectives which takes into account the assets of the business or the individual, liabilities and the credit standing as well. Financial planning is essential for both businesses and individuals and it is concerned with the aspect of taking control of the financial accounts as well as taking the advice of experts or of the counsel regarding matters of real estate so that the right decision regarding insurance policies and evaluation of stock options is taken.

Significance

As planning is performed both for the individual and for the business, this aspect involves taking into consideration of the tasks and activities at both these levels. Firstly, there is the aspect of checking the budget for household expenses; starting savings account for retirement funds and all these aspects needs to be taken care of at the individual or the business level so that sufficient cash flow is ensured and you can make decisions regarding your investment plans. You require the expertise of a reliable financial planner so that you can make relevant decisions regarding the allocation and the management of money. Financial planning plays a pivotal role in the assessment of financial standing which allows for the allocation of financial assets in the best manner.

Function

Planning becomes necessary in the lives of all those people who have managed to earn significant portion of wealth and assets especially in the form of liquid assets and planning of the finances will help in outlining a healthy financial future so that you can take benefits of the investments and stock options.

Features

How does financial planning start off? The planning of the individuals or the business's finances starts from the financial analysis of the company or the individual and eventually a statement is issued out which emphasizes on the assets and liabilities and concludes by stating the net worth of the business. It is the work of a financial planner who will make the respective recommendations regarding retirement planning, education funding and insurance policies which will be the most suitable for the client.

Benefits

Most people benefit from a financial plan and for this purpose, the services of a professional financial planner is required at certain times. Some of the most important advantages of making use of planning services are to work hand in hand with a trusted advisor, analyzing risk tolerance, eliminating the risk during financial crises and to prevent the occurrence of the financial crisis in the first place.

Considerations

Many of the banks and financial bodies are known to provide financial planning services to customers for free which acts as a great boon to them. Many consultation bodies offer financial planning to their clients for free of charge and it is mostly the private firms which charge their clients for the financial planning services which they offer.

Financial Planning the Right Way: Mapping Your Future With a Professional Financial Advisor

2011-08-02T10:34:00.000-07:00

Anyone can write a financial plan, or at least it seems that way. You can consult your banker, go to a brokerage firm, or hire someone who calls himself or herself a financial planner to prepare a plan for you. Financial planning simply isn't that complicated, right?

Let's consider what's included in a comprehensive financial plan. There's a section on what happens if you died today. Will estate taxes be due? Does your estate have enough liquidity? Another section outlines what happens if you become disabled or need long-term care. Have you saved enough for retirement? And how will you pay for your kids' or grandkids' college education? What about charitable giving, income tax savings, and investment allocation?

The first place to start is selecting the right person to develop a financial plan. Find someone with a fiduciary responsibility such as a Certified Financial Planner.

It is important to seek out someone who will listen to your objectives and design a plan to meet your goals. Be sure the person you choose to draft your initial financial plan is familiar with how the planning you do in one area affects outcome in another. For example, what you do in the area of investment planning can affect your tax planning. What you do to provide for asset protection can affect your estate planning, and so forth.

A sound financial plan should also address how you are expected to behave when placed in a variety of scenarios. The only certainty in life is that the unexpected will always happen. When placed in an unexpected situation, most people will tend to make major decisions based on emotion, and then try to rationalize them, undermining their long-term planning. Therefore, a solid financial plan should be flexible enough to accommodate the unexpected. This is especially true in the investment-planning arena. It is important to have a written investment policy statement to help protect your portfolio from unplanned and impulsive revisions of sound long-term policy. Especially in times of market turmoil, investors without an investment policy statement are inclined to make investment decisions that are inconsistent with prudent investment management principles--and their best interest. Your investment policy provides an agreed-upon and well-thought-out framework from which sound investment decisions will be made.

Many people believe the process ends once the plan is written. But good financial planning means regularly monitoring and adapting strategies to ensure you're meeting your goals. Remember, you're not just trying to create an end product that won't ever need to change. You're developing a map that will help guide you toward financial stability. And regular comparisons of where you planned to be in the future with where you actually end up can generate important discussions about why you ended up where you are. Are you ahead of plan because your investment portfolio did better than expected, were taxes lower than expected, or maybe you spent less than expected? The reason you end up at a particular place is important to understand because that determines what types of adjustments might be needed for your plan A financial plan that's developed with the help of a professional financial planner could be the right map to help you reach your financial destination.

Many people can help you prepare a financial plan, but the most successful plans are crafted by professional planners whose allegiance is to you, the client. Professional planners have the credentials and understanding to know how the different areas of financial planning affect one another so they can help determine what is right for you. And professional financial planners will follow up with you after the plan is in place to assist in analyzing deviations from the plan in order to make competent adjustments to steer you away from failure.

What Is The Best Financial Planning?

2011-08-01T10:29:00.000-07:00

Financial Planning is a term we hear bandied about in the media all the time, but ask people "What is financial planning?" and you are bound to get many different answers. It means different things to different people, but the most important question is what does it and what should it mean to YOU?

To a young couple starting out the best financial planning could be a way to save up the down payment for a home while still paying for all the bills and keeping consumer debt under control.

To a couple with children planning to fund college or university expenses could be the most important issue.

For someone who has lost their job it might just be figuring out a way find new work or generate an income.

To folks suffering from crippling debt it can be discovering a way to comfortably maintain that debt and beginning to pay it down.

For folks approaching retirement it is ways to make sure retirement income will be available to cover the cost of retirement living without the fear of running short.

Simple financial planning for a young couple starting is--making sure the appropriate amounts of life insurance are in place and if you plan to buy a house. (Remember--owning a home is more than just having a roof over your head.) How using an RRSP (Registered Retirement Savings Plan) is the easiest way to accumulate a down payment.

To the family planning concerned about the costs of their children's post-secondary education, financial planning is a big help. But it is something to be considered when the children are babies or toddlers.

In the case of someone recently unemployed, it's important they take stock of the employment opportunities in their chosen field to determine if what they wish to do is viable. And take stock of their skills education and capabilities. Two sets of job skills can be a life saver and if there are no jobs--having the mindfulness to look at opportunities for self-employment, starting a small business or even taking the steps to move to an area where there are jobs.

To folks overwhelmed by debt a financial planning can simply consist of some guidance and a better understanding of how their current fiscal situation occurred and the steps they can take to change things for the better.

And the one most people equate with financial planning--retirement planning. The key to retirement planning isn't how much cash you have accumulated but rather the amount of after-tax cash flow available for retirement living. It is important that you take steps to ensure you don't inadvertently cause claw-backs of your government benefits.

The elements of financial planning described here are purely small thumbnail sketches of strategies that can be used.

Actual financial planning is a more in-depth and extensive process which takes place over time and is designed to help you achieve the results you want.

In conclusion whatever your issue is--the sooner you begin your financial planning the more likely you are to see success.

Financial Planning - A Planning to Achieve One's Financial Goals

2011-05-28T05:45:00.000-07:00

While one cannot predict the future, one should certainly be better prepared for it as all of us have our goals to be fulfilled at every stage of life and these goals will only be achieved if one has done the financial planning. So, its better to start planning now as prevention is always better than cure. It is a systematic approach whereby the financial planner maximizes customer's existing financial resources by using the appropriate financial tools and investment vehicles to best achieve his financial goals and objectives.

In other words, it is the process of meeting once life goals through proper management of one's finances. Life goals can include buying a home, saving for children's education,buying a car, protecting family against financial risks or planning for retirement. The need for financial planning arises from the need of meeting the financial goals of one's life & it helps us to take a comprehensive look towards one's futures financial needs and goals including cash flow, debt management, education funding, retirement planning, estate conservation and portfolio management. It also gives you the direction to make informed decisions about your investments so that you won't make any mistakes and you can reap the benefits of your planning for the rest of your life.

Financial planning(FP) is simple mathematics. There are 3 major components:

    Financial Resources (FR)
    Financial Planning Tools (FT)
    Financial Goals (FG)

When you want to maximize your existing financial resources by using various financial tools to achieve your financial goals, that is financial planning.

FP: FR + FT = FG

Benefits of Financial Planning:

Financial Planning ensures that the right amount of money is available in the right hands at the right point of time in future to achieve specific Financial Goals. Virtually anyone with moderate wealth or a decent income can avail the benefits of financial planning like:

    It is based on individual risk profiling, and it provides a road map to achieve financial goals
    It helps you take a 'big picture' look at your financial position and it guides you to examine your current financial status and determine objectives.
    It helps in devising a strategy or plan for how you can meet your goals given your current situation and future plans. It also identifies weaknesses and recommends improvements.
    It puts in place the risk management system to meet uncertainties of life through efficient Insurance Planning, Tax Planning and Estate planning.
    It is the process of managing your money to achieve personal economic satisfaction. It allows you to control your financial situation and provides a feeling of security and less stress.
    It is a disciplined approach to managing your finances to reach life goals. It involves systematic & disciplined investment mechanism, which helps in creating wealth over a period of time. It helps you to become more responsible towards disciplined investing.

Financial Planning Process:

The Financial Planning Process consists of six steps, using which, you can work out where you are now, what you may need in the future and what you must do to reach your goals.

    Step 1: Determine Your Current Financial Situation
    Step 2: Develop Financial Goals
    Step 3: Develop various alternatives
    Step 4: Evaluate Alternatives
    Step 5: Create and Implement an Action Plan
    Step 6: Re-evaluate and Revise One's Plan

Financial planning, especially at an early age can help to give your life focus and help you to achieve your goals in life. So, start planning your finances today and fulfill all your dreams & goals of life without any hassles.

What is Comprehensive Financial Planning?

2011-05-27T05:36:00.000-07:00

Financial planning is about building an objective plan for your financial future. You should follow these principles to ensure that every aspect of your financial life is covered, and therefore build a solid foundation to meet your goals.

Your goals will depend on your own personal situation and what you want for the future. For example, you might want to plan for retirement, buy a second home or send your kids to private school. The list is only limited by your imagination.

This is all based on a common sense approach. Anyone can do it, you just need to be methodical and objective.

What about financial advice?

Unfortunately, most financial advisers do not offer comprehensive financial planning. Most of them are glorified sales people. This is proved by the fact that they usually sell products rather than plans. If your financial adviser starts by talking products he is thinking about himself rather than your future!

Of course, there is a place for products, but only at the end of a comprehensive analysis of the reasons why you need that solution. What's more your financial plan might reveal that you do not need further products!

What should be in my plan?

Here are the main areas which need to be covered. There may be other areas, depending on your own circumstances.

Gathering data

You need to think of your plan as a whole because your financial decisions are inter-linked. For example, if you have an expensive mortgage this may impact on your ability to save for the future. You will need to get together data on every aspect of your financial situation.

Setting goals

Without an end in mind, it will be difficult to evaluate your progress. Therefore you should think carefully about what you want your future to look like. These goals should be measurable.

Income and outgoings

This is fundamental to building your plan. If you spend less than you earn, you have a chance to affect your financial future. If you spend more than you earn you will have limited options and could spiral into debt. Understanding tax is a big part of this.

Assets and liabilities

You need to build up assets to underpin your financial future. And more importantly you need to build up the right kinds of assets. The sooner you can be debt free (unless it is the 'right debt'), the sooner you can be in control. For planning purposes we ignore certain types of assets.

Emergency funding

Making sure you can cope with short-term crises is vital. We recommend that you set aside 3-6 months worth of outgoings.

Protecting what you have got

You should think about what happens if things go wrong. This includes all types of insurance to ensure your lifestyle is defended from catastrophes. You should also consider making wills and powers of attorney etc.

Paying off debt

Generally, any debt is a barrier to your future prosperity. The sooner you become debt free, the sooner you have control over your future. Remember that your bank manager includes your mortgage as one of his assets!

Saving for the future and investing wisely

You need to work out how much will be needed to fund your future goals, how much risk this requires, and the effect of external forces such as inflation, charges and future legislation.

Tax

While this should not drive your plan, it is certainly an important part of the equation. Understanding how tax affects your life should run throughout your plan.

Monitoring your progress

Financial planning should be much like servicing your car. You would not spend £20,000 on a new car and then never take it to the garage for a service. Likewise, you should regularly review your plan to ensure your remain on target to meet your goals.

Of course, your circumstances will also change over time, so your ultimate goals may also need a tweak from time to time.

Conclusion As you can see, a proper financial plan should be extremely detailed, and will take some work. However, the rewards will really benefit you as you will be back in control of your life.

What is Financial Planning Anyway?

2011-05-26T08:00:00.000-07:00

"Financial planning" is a term that has been widely used over the last couple of decades to attempt to explain the activities of investment, insurance and tax professionals. While it has been used more and more by these professionals for marketing purposes, the term is largely misunderstood by the public because the activities to which the name is applied vary as much as the entire financial industry.

As a consumer, you need to understand what financial planning is and how important it is to your future.

Define the Terms

"Financial" means having to do with money and the use of it.

"Planning" is the action of laying out a series of actions beforehand to achieve a known objective or goal.

Hence, "Financial Planning" is working out programs and procedures with your money to pay for the most important goals in your life.

The problem is that when you go to a "financial planner" sometimes the only subjects discussed are usually investments and insurance, and real planning doesn't get done. Sure, there are "tips" and "suggestions" to improve your finances, but implementation of efficient programs to assist you into a factually better financial condition are rare.

The 4 Basic Goals of Financial Planning

In my view, there are 4 basic goals of financial planning:

1. To actually increase the income of a business so that more profits can go into the business owner's household (this is business consulting, but it is definitely within the province of financial planning).

2. To manage and reduce as many of the real risks to your wealth as possible (there are many more than you think).

3. To predict and provide for known and "unknown" future expenses so that financial setbacks do not occur.

4. To use the most efficient programs available so that specific financial goals can be achieved with the maximum results and lowest actual waste.

The only way to efficiently and effectively achieve your financial goals is to plan for them. Unfortunately, most people don't plan because it actually requires time and attention. The reality is that if you don't plan, you won't get there. One actually spends more time reacting to situations trying to combat or mitigate emergencies that are created by lack of planning. It's as simple as that.

Financial Planning - The 10 Key Questions to Ask Yourself

2011-05-25T07:51:00.000-07:00

No matter what stage of career you've reached, or even if you've retired, there's a number of key questions that you should be able to answer to give yourself the confidence that you've addressed all the important areas of your financial planning.

So, today, I'm going to run through the key areas that we run through with each client to take a 'barometer' of their financial planning health.

Let's get started.

So, have you...?

1. Really thought about what you want for the rest of your life?

The dreaded 'setting goals' part...You've already done this for your career and no doubt in other parts of your life as well. So, now's a good time to take stock and think about how you want your life to look from now on. It may well be that it's in tip top order and nothing needs to change - the key is to go through this 'discovery' process with you and your significant other.

2. Fully organised your various assets and analysed how they will help you achieve your goals?

A major goal for all doctors and dentists is planning towards retirement. I presume you have other goals as well, ones that will require money to achieve? So, the question is: will what you're doing now with your finances allow you to achieve your most important goals? You may or may not know the answer to this. After all, it can sometimes be difficult to work out whether you'll have enough money for your future.

3. Completed a detailed expenditure plan so that you'll know how much money you'll need to live the life you want when you stop working?

How much money, after tax, will you need to fulfill all your goals once you've stopped working (and the salary/net profits have ceased)?

£3,000 per month?

£5,000?

£10,000?

What's YOUR number?

This exercise is crucial and it's what drives many of the financial decisions that you'll face between now and giving up work.

4. Created your own Financial Forecast to show when your 'Financial Independence Day' will be?

At what age COULD you give up work if you chose, even if you decided to continue working? Financial forecasting will allow you to see your financial future and help you make your financial decisions. Now, it probably IS possible for you to do this exercise yourself, maybe using Excel or a similar tool. However, I would advocate using the services of a financial professional that provides this sort of analysis. Not all do, so you may need to do some detective work. A good place to start is the Institute of Financial Planning's website.

At the site you'll be able to search for Certified Financial Planners (you'll find yours truly on there). Whilst that will not guarantee that they offer financial forecasting to their clients, there's a high probability that you'll find one that does.

The KEY benefit is that you'll be able to work alongside someone that is able to provide you with an objective viewpoint without having an emotional attachment (that inevitably you and your friends or family would have).

5. An overall written Financial Plan and Strategy to guide you over the years?

If you've taken the time to take action on the steps above, the KEY is to implement your plan. What action do you need to take to increase your chances of achieving your most important goals?

You'll probably find that there's quite a bit of work involved initially, but if you set things up the right way, the ongoing time required to keep your financial plan on track should be minimal, especially if you are using a Financial Planner to drive' the whole process for you.

Yes, ok, I'm obviously a little biased in my comments seeing as I earn my livelihood from working as a Financial Planner. But let me ask you a question.

How valuable is your time?

Looking at it another way, do you do your own accounts each year?

Exactly! So why spend hours each year trying to learn a skill that you can outsource to a competent professional who performs that role all their working lives?

Choosing the right Financial Planner is a very important decision. Take your time and make sure they are offering a long term strategic financial planning service, rather than a product retailing service (which actually may be fine if that's all you need).

And make sure you pay them a fee for the service they provide. If they only work on a commission basis, guess what will probably happen at some point in your dealings?

Think about it, how else would they earn an income if you don't buy a product? (that's not to say commission is bad - I just believe it should not be used to remunerate a Financial Planner who is providing you with a comprehensive financial planning service).

6. Made sure your Wills are up to date? (assuming you have one)

You do have a Will, don't you?

If not, this step is crucial. Let's say you've gone to the trouble of putting in place all the steps highlighted. By not taking this last step, all your hard work could be undone. Without a Will, you would die 'intestate' and your assets would NOT be distributed in line with your wishes.

So, contact a solicitor and get it set up! The cost is not too much and once you've done it you'll be able to tick another box on the road to creating your robust financial strategy :)

Whilst you're getting the Will sorted, ask the solicitor about setting up Lasting Powers of Attorney. In brief, These are legal documents and they provide consent to another party to act on your behalf to deal with your relevant financial matters should you be incapable of doing so.

7. Investigated how much risk you are taking with your investments?

If you have ANY money invested in traditional investment schemes such as personal pensions and equity ISAs, you owe it to yourself to take the time to analyse how risky your investments are. Sadly, some medics and dentists believe they have diversified their risk simply by holding a number of funds within their ISA/pension. But what if all these funds are equity based funds? It's entirely possible that they are taking too much risk with their money but may not necessarily have access to the right information to make better investing decisions.

8. Analysed how much risk you SHOULD be taking?

Even if you have a good grasp of how much risk your money is exposed to, do you actually know whether you should be taking more or LESS risk in order to achieve your goals? For example, if you're on track to achieve all your goals, you may be able to reduce the amount of risk you are taking and still remain on track.

9. Checked how much you are paying in investment costs?

When you invest any amount of money into 'mainstream' products, such as Equity ISAs and personal pensions, a certain percentage of your money will be taken in charges levied by the investment company/product provider. Typically, these may include:

    sales/advice commissions
    initial charge for the investment (usually ranges between 0-5%)
    ongoing annual management fee
    other fund expenses (known as Total Expense Ratio)
    trading costs within the fund(s)

Now, I appreciate that delving into all this may not overly excite you. That's fair enough. But just because you don't have the time/interest/inclination doesn't mean you should ignore it!

As with point 5, get it outsourced to a competent professional. The end result you're looking for is to check how much you ARE being charged and whether you are able to reduce these, where possible.

10. Recently completed a proper psychometric risk evaluation?

What makes you tick? Do you know why you've made certain investment decisions in the past? What influences your decision making process? Rather than simply judging your attitude to investment risk on a scale of 1:10, you need to go 'deeper'. There are tools available to help you understand how you make financial decisions and how to improve your ability to make these important decisions. Ask us, or your financial adviser/planner, for more information.

BONUS STEP

11. An Investment Philosophy to take you through good times and bad?

Does your investment portfolio consist of a collection of funds that perhaps were selected a number of years ago (and have not been reviewed since), or do you have an investment philosophy that underpins all your decisions?

It's probably fair to say that many medics and dentists will fall into the former camp, although that's often the case because their financial adviser/planner has not developed an investment philosophy of their own. Ask your adviser/planner (if you use one) what philosophy they are using for the management of your money.

The Super Bowl of Financial Planning

2011-05-24T06:30:00.000-07:00

Being from Pittsburgh means this past Super Bowl was especially meaningful to me. The Steelers winning the Super Bowl was like shooting electricity through the city. Everyone gets caught up in the excitement our winning football team generates. I don't think I am like any regular Steeler fan though. Yes, I yelled, jumped, and swung a Terrible Towel just like everyone else, but to me the Steelers offense reminded me of how a well written financial plan works!

You see, so many of the activities that a football team's offense does relates to what will happen to you in the course of managing your personal financial plan. The offense's goal, like your financial goal, is to repeatedly demonstrate forward progress and score. In football scoring means touchdowns. In your life that means more dollars in your pocket! Sure there will be set backs, but a good financial plan/offense will net far more dollars/yards then it loses.

The Offensive Coordinator

In football the offensive coordinator plans different strategies that will overcome each opponent the team will face. He then brings all those strategies into packages of different plays. Each play and series of plays are designed to overcome the foreseen strengths of the challenging defense and move the team forward. Additionally, he is responsible to work with the coach in creating a discipline and competence in the team that allows them to continue to excel even when the practiced plays are not working.

You are the offensive coordinator of your financial plan. It is up to you to have studied and prepared for the financial issues you are going to run into during the course of your year. If you are involved enough in your financial planning you will generally have a good idea of the costs you will face in the next 12 months. Of course, there will be unexpected costs that arise, but a good coordinator has contingency plans ready for when that happens.

As the financial offensive coordinator you will bring together the strengths of each "position" on the team in order to maximize your efforts. Just as importantly you will find ways to get through the "defense" whose goal is to push you back.

The Defense

The defense's primary goal is to stop your forward progress and push you back. Just like the unexpected problems life sends you, a defense can come up with surprise plays as well and catch you off guard if you are not ready. Think about some of the things that can throw your budget for a loop. You hit a giant pothole on the way to work and it destroys the new tire you just had installed. The furnace breaks down on Super Bowl Sunday right before game time. The price of groceries and gas goes up just as your boss told you there will be no pay increases this year. You fall and hurt yourself bad enough that you can not get to work for the next 6 weeks. Unexpected events are going to happen to you.

Sometimes you may think there is a supernatural force out in the world whose goal is to make you sweat. The fact is you are not being singled out but rather "life happens" to all of us at some point. The point to remember is to be prepared. If every position on your financial offense is playing to the best of their ability you will be in a much better position to deal with anything life's "defense" throws at you.

The Quarterback

As the quarterback of your financial plan your responsibility is to follow the budget and direct the activities on the field of play so that positive gain is made and losses are kept to a minimum. Your field of play is life. As quarterback you are going to point out potential threats or opportunities so that the right amount of attention is applied where needed.

The team follows the football and the quarterback will use the football to move the team forward. When the quarterback gets the football moved forward the entire team moves up to where the ball is spotted. In a sense the budget is your football because it represents your resources which you will use to move your quality of life forward.

Financial First Downs

Just like a good quarterback keeps an eye on the field markers you should also be looking for things that mark you progress. What markers can you use? You can keep track of savings you received in a month. Another marker could be particular dollar level in your savings account ($100, $500, $1000). Reaching these markers or easier goals indicate to you that you are moving forward. Conversely, they could also indicate if you are moving in the wrong direction and a different action is needed. You goal doesn't have to be the end zone every time but certainly making financial first downs would be a good goal every time you have to make a purchase.

The Offensive Line

The offensive line protects the quarterback from defensive players who attack him on every play. You want these guys to be big and strong because the defensive players that are gunning for the quarterback have one focus and that is to stop the quarterback from implementing the plan.

In your life your financial offensive line is composed of things like appropriate insurances, preventative maintenance, warranties, recordkeeping, and planning ahead. Recordkeeping is my favorite example.

I have seen so many people get in trouble over poor recordkeeping. If you don't have something in writing you don't have any proof to back up your claim. Whether you like it or not, it won't matter how honest of a person you are, your good word doesn't mean much in court. It is easy for a creditor to claim you never paid them if you can't prove otherwise. The IRS can force you to pay more in tax if you can't prove your deductions. Businesses can claim you agreed to less beneficial terms unless you can prove otherwise in writing.

Penalties

Many times there is a monetary "penalty" to pay for not keeping everything in writing. If you didn't keep your purchase records you may not be able to use the warranty you paid for. You will end up paying for repairs out of your pocket. If you don't have your insurance policies in writing you may be unaware of a benefit you should have taken advantage of instead of paying for it out of pocket. Any time you pay extra because you didn't have something on record or in writing you are paying a penalty.

The Wide Receivers

Wide receivers have to be quick because there is a very short amount of time available to take advantage of the larger opportunities. They also have to be good at sensing opportunities to score big and then be ready to take them because they don't come very often.

In your life opportunities to save big or receive much more value from your purchases don't come as often as regular sales. An example would be furniture. Furniture is a major purchase and can be very expensive. However, like seasonal clothing changes, furniture manufacturers and styles come and go. That means that furniture that was selling at a higher price yesterday could be discontinued today and selling at a much lower price since the retailer needs to get it off his showroom floor. That is your opportunity to save big on a planned furniture purchase.

Get Open

The key to this example and other similar scenarios is planning for them thus putting you in a position to "be open" take advantage of them. If you have the need and find quality furniture at a bargain price but have no money it is just a missed opportunity. That is why you plan for your needs well in advance and budget for them. If you know that you will need furniture this year, an expensive item where you could save a substantial amount of money, you should plan for that purchase. What you do know is that you will need furniture. What you don't know is when the furniture you want will be offered at a substantially lower price. That is why you have to 1) budget enough money to make the purchase and 2) set up a system that regularly checks for the right deal.

Wide receivers run out on every play looking for the big gain. However, most of the time that is not going to happen. They keep trying though and that means eventually they will score big. In your role as wide receiver you should do the same thing. Don't run out to make a purchase with the unrealistic expectation that you will save big every time. Rather, be patient, be patient, and be open! If you keep looking you will eventually make the big catch and score!

The Running Backs

Running backs are not typically looking for big yardage gains but rather focus on moving the team forward in smaller increments. That doesn't mean that they are not as important as wide receivers. Forward progress is positive whether it is 4 yards or 20 yards at a time. There are times when the game of football is a game of inches. Those inches can make or break a team. That is why any gain is better than no gain.

When you are in the financial plan's "running back" position you are responsible to move the plan forward a little bit at a time. How does that happen? If you follow your budget to the penny I consider that no gain. You gain "yardage" when you spend less than the budget called for. How do you do that? You can do that with coupons, barter, auctions, liquidations, or sales that allow you to spend less that you had planned on. That savings moves your quality of life forward because you now have "created" more money than you would have had at the end of the month.

Your Playbook

In my life I have a "playbook" for my running back position. I call it a "bargain hunting worksheet". On one part of this worksheet I have listed all the products I use regularly and semi-regularly. I also keep a record of the prices of each item at the stores I shop at. I take this sheet (and a calculator) with me every time I shop and just make updating it part of my shopping routine. Secondly, this record lets me know if the price I am about to pay for something is appropriate, has gone up, has gone down, or is lower at another store.

This shopping playbook of mine also helps me compare sale prices. Prior to shopping I browse all the local ads online looking for deals on the things I need. When I started this practice I was naively surprised to find that some retailers' "deals" are not really deals! When I compared their deal to the prices I had on my bargain hunters sheet I discovered the price I had been paying was still lower than the other guys! If I didn't have that sheet I would have been strongly tempted to go buy the "deal" and ended up paying more! That would have been a loss of financial yardage!

The Tight Ends

The tight ends are multi purpose players who assist others making their plays like blocking for the backs or distracting the defense away from the wide receivers. Additionally, they are available to the quarterback as another option to move the ball forward if other players are going to be unsuccessful.

In my personal financial offense my family and friends are my tight ends. They are very aware of my goals to save and move my financial goals forward. They help me by serving as additional sets of eyes. They may find deals I was unaware of, like a new restaurants 2 for 1 dinner special. They may have heard about potential problems that I didn't know about, such as a very poor and costly experience with a particular health insurance plan at work.

Scoring

If you are a football fan you can relate to the excitement you feel when your favorite team scores a touchdown! In your personal life scoring a financial touchdown can be even more exciting because that is money in YOUR pocket! Scoring on the football field or in your financial plan is no small task. You need a plan. You also need each position on your offense to play hard and smart. Your job is to bring the efforts of each of these positions together in order to achieve your larger goals, most importantly of which is steadily improving the quality of life you and your family enjoys.

Is Financial Planning Key to Success in Life

2011-05-23T07:53:00.000-07:00

We need a plan at any stage in life, as a plan clearly shows us a route, a cause in life that we have predetermined to follow in a period of time or for life. The plan is set down as a model on which our goals are based and which will be a basis for comparing our actions and achievements over a period of time.

Who needs to undertake financial planning?

The answer is that both individuals and businesses need to engage and constantly do financial planning. Just as a lack of a good financial plan has introduced and led to failure of most businesses, lack of financial planning has also led to the failure/distress or bankruptcy of most individuals both young and old.

This goes on to point to the fact that that financial planning as a culture should be encouraged in each individual and should be undertaken by both young and old as much as possible. Financial planning at the individual level is different from the retirement planning or investment plans for future possible retirement.

What are the basics of financial planning?

Basically the process of financial planning involves a series of steps, which can be undertaken by anyone with interest on it. This covers the following steps, setting a broad set of goals comprising all /as many aspects of the goals for that period of our individual life.

Next is that you take stock or re-examine your current position and compare this with your set goals . This study or analysis of the present situation will help to point you to some gaps between your planned goals that will need to be filled and your current achieved goal. In this analysis you will closely examine the goal , gaps and current financial position and consciously need to find out whether or not you will be able to meet your plans in the period or not, what possible cash shortages or surpluses may occur in the period covered by the review. Most times financial plans are compiled into budgets and cash/fund statements with notes.

The process will alert you to decide in advance what you may do with any cash surplus and to compare the alternative investment options to be considered, thereby maximising your wealth. On the hand where a shortage is expected you may have to seek ways to cut down on your planned costs or expenditure or postpone some of your investments to the future.

Eight Questions Everyone Should Ask About Personal Financial Planning

2011-05-22T01:02:00.000-07:00

What is Personal Financial Planning?

Personal financial planning is guidance by a licensed financial professional on the financial decisions faced by individuals. It includes portfolio allocations, future planning decisions, goal setting, and exploration of different investment vehicles.

Is Personal Financial Planning Necessary?

In order to sufficiently organize your finances in such a way as to reduce taxes, maximize investment opportunities, save time, and appropriately distribute risk, you should engage in at least some form of personal financial planning.

But Can't I Just Do It Alone?

Possibly, but will you? Most professionals and business people have found it increasingly difficult to do their financial planning on their own. The most common walls to planning on your own are:

    Insufficient time
    Too great a number of investment possibilities
    Tax laws change to frequently to keep up
    Untangling employee compensation and benefits

What is Typically Included in a Financial Plan?

The length of the plan is based on the complexity and details required for each individual's circumstances. The typical plan can range from anywhere between 15 to 200 pages and includes:

    Cash Flow Analysis
    Debt Management and Investment Portfolio Assessment
    Estate Planning and Liquidity Analysis
    Tax and Planning Projections
    Retirement (forecasting benefits, costs and options)
    Insurance Needs (life, property, casualty and disability)
    Educational Funding
    Employee Benefit Analysis (coordinate personal holdings)
    Business Analysis (if applicable)

What is My Role in the Planning Process?

You and your spouse obviously have a crucial role in the planning process. The plan is custom built to your specific circumstances, and as such should include specific aspects of your life. You should make sure that your planner understands you attitudes, goals, risk tolerance, and security needs. The more the planner understands you, the more customized your plan can become.

Are Fees for Financial Plans Tax Deductible?

Yes. Expenses for investment and tax planning are deductible as itemized expenses, subject to limitations - IRS Section 212.

How Can I Measure the Worth of Financial Planning?

Once the planner has assessed your situation and made recommendations, you should be able to compare the projections with the cost of the analysis. Your planner should have presented data that more than paid for the expense of the plan.

Will Personal Financial Planning Make Me Rich?

Regrettably, get-rich-quick schemes generally don't work. This makes personal financial planning all the more important. Proper planning will help you keep more of what you earn and assist in helping your money work harder for you. It will do this by:

    Increasing the productivity of assets
    Providing financial and emotional security for your family
    Broadening asset structure to reduce risks
    Providing participation in new investment opportunities
    Increased income through tax planning
    Investment alternatives are provides closer inspection
    Minimizes the negative effects of disability, early retirement, and death

How to Know If You Need a Financial Planning Book

2011-05-21T08:10:00.000-07:00

If you're unfamiliar with terms like "financial planning" and "personal finance" and what they entail, then you probably need a financial planning book. Personal financial planning has been emphasized quite a bit lately through the various media channels, and terms such as those mentioned above have become buzzwords with how people seem to be going on about the importance of financial planning. Fact of the matter is, anyone who isn't a financial adviser or a financial planner should have a financial planning book. To determine if you need a financial planning book, read the rest of this article. If most of the concepts presented seem alien to you, then you should get yourself a book today.

For those who are not aware of what financial planning is all about, it is a process by which a person works out the necessary steps to meet his expected needs and come up with countermeasures for the unforeseen circumstances he might encounter financially. Factors such as inflation and changing lifestyle need to be taken into consideration when coming up with a personal financial plan. When planning for your future financial needs, you need to know the technical jargon and concepts of certain financial instruments and how money works. Without adequate knowledge of any of these, it would be hard pressed for you to come up with an effective financial plan for yourself or your family.

Take debt for example. Are you aware that debt is one the major financial issues that people face today? Are you in debt yourself? Just how do you get out of debt? Most people who are in debt feel like they're trapped in a vicious and endless cycle, especially those who borrow to pay off their debts. They feel like they have no way out; no way to be free from the shackles of debt that weigh them down financially. Getting out of debt requires careful planning, and adequate knowledge of how to make your money work for you. A book on personal money management can help you to come up with ways of how to manage your debts and eventually become debt-free.

How about retirement? Do you know how much you need at the end of the day for your retirement fund? With increasing inflation and changing lifestyle needs, are you prepared for a costlier cost of living by the time you're old enough to retire? Do you know what investments to consider when planning for your retirement? Should you bank on day trading or mutual funds? How about insurance? How will that help you financially at the end of the day?

So in summary, a financial planning book can help you understand the concepts that you're required to know when coming up with an effective financial plan. A comprehensive book can cover anything, from basics like personal money management and budgeting to something even more complex like money market investments and insurance. If you find yourself having more questions about financial planning by the end of this article, then rest assured you do need a financial planning book. So get one today.

Personal Financial Planning, Peace, and Independence - Achieve Financial Freedom

2011-05-20T09:22:00.000-07:00

At one point in time, everyone has sought a way to increase his or her monthly income to pay off mounting debts, either through effective personal financial planning or an outside credit consulting company. Sometimes, the stress of having limited funds becomes too much to handle, and a plan is then determined to be vital in order to achieve financial freedom from the credit companies. Most consumers would be better off creating their own personal financial planning schedule because this action allows them to take full responsibility and requires that they began to dig themselves out of a deep hole of debt.

In order to achieve the financial freedom you've always dreamed of, you must first begin by integrating a system of personal financial planning into your life and budget - and only then will you find economic peace and independence. Imagine no loans, no debts, no growing stacks of bills - it's all possible if you make a plan to get out of debt and not simply talk about it.

Planning

Dave Ramsey, a financial planning and self-help expert with his own radio show, makes it his business to help others find the peace they seek. He caters to a growing sector of Americans with mounting debt and offers them solutions to achieve financial freedom with comprehensive personal financial planning that addresses all facets of an individual's budget. One of Dave's tips is to pay off the smallest debt first - an action-based approach he terms the Debt Snowball Plan. By eliminating the smaller debts first, you begin to see results immediately. He recommends saving $1,000 in cash and then using this to pay for the small debts first. The rapid eradication of these debts will motivate you to begin tackling the larger ones.

Additionally, he recommends a sort of reward system to keep track of the success of your own personal financial planning schedule - keep your old payment slips and notices close by for reference and display those that have been paid off in full. If you stay with this proven plan, you will be debt-free (1), and you will achieve financial freedom. The ability to achieve financial freedom is not necessarily difficult; it just involves you sitting down and formulating an effective hands-on approach to personal financial planning in order to eliminate your debts. Some experts also recommend cutting up your credit cards to prevent you from spending excessively. After all, if you don't have the money for it, you probably shouldn't be purchasing it.

Peace

Acquiring a level of peace in the face of debt is possible. Many Americans consult articles, books, and websites on the subject everyday. It's important to remember that you're not alone in the battle against debt; you can get out of the hole and achieve financial freedom with time. Peace is achieved once your personal financial planning outline has been executed successfully, but you can't just sit back - you do have to work for it. Consider how credit companies make their money - by charging excessive interest and expecting you only to pay the minimum amount due each month. And, let's face it, if you can't pay the minimum amount, you shouldn't even have a credit card. With such obvious gouging of consumers' wallets, what can you do to get ahead?

    Never pay just the minimum balance, but do pay what you can.
    Don't buy items you don't really need; save your money for a rainy day.
    Switch to a card with a lower interest rate or more perks, rebates, or travel benefits.
    Live well below your income; after all, there's really no need to show off.
    Use your credit card wisely by making a list of detailed, necessary expenses on your personal financial planning schedule.

Don't let the credit card companies take advantage of you any longer - take control of your fiscal situation and achieve the financial freedom you desire. Taking the first step towards paying off your debts is also the first step towards peace.

Independence

Much like the Dave Ramsey spot on the radio, consumers also get monetary advice from the empowered spending and saving money expert, Suze Orman. Consumers watch her show each night to get useful tips to achieve financial freedom and independence in their own lives. Her recommended personal financial planning guide for financial independence, outlined in her Nine Steps book, is to make paying off your debts a top priority and following these guidelines (2):

    Cut up all of your credit cards - except for one which is to be used for emergencies only. However, do not keep this card in your wallet.
    If you want to avoid 30 years of debt, pay more than the minimum balance but do the math. Calculate your interest rates and money owed to find out the actual amount you want to pay each month. Make it on your own personal financial planning schedule.
    Pay off the credit card with the higher interest rate first.
    Research the terms of your credit card fully - fees, charges, grace periods, or whatever else you deem appropriate.
    If you still feel lost and unable to achieve financial freedom, get help! The Consumer Credit Counseling Service exists to help you organize and consolidate your debt. Begin your first steps toward independence by calling them at 1-800-388-2227.
    Once all of your debts are gone, use the money you would have paid to credit companies toward a brighter, more independent future. Most importantly of all - keep on the path to remain debt-free and continue to strive and achieve financial freedom.

Financial Planning For Business Owners

2011-05-19T11:09:00.000-07:00

Business owners are not looking for financial advisors to give them the life they want by making a killing in the stock market; these people have been able to create the life they want by themselves. In the early 1990s, at the beginning of my financial planning career, I was very fortunate to meet one of Canada's most successful businessmen. He was in his late 50s and had much more life experience than me. He shared that 99.9 per cent of the investment advisors he had met over the course of his career did not have the foggiest idea of how to make money nor did they understand what successful business people were looking for when they sought out professional advice.

He told me that when he took a risk he got paid for it. He could buy a piece of property for a marginal amount, get it rezoned for a shopping mall and then get franchises to sign letters of intent to lease for five years or more when the property was developed. Once this was done he would go off to the bank and borrow on the future revenue that would be generated from these highly profitable leases to develop his properties and create a residual income. He knew he could take his own money and make 100 times the amount with 1/10th the risk that any stock broker could offer him and he was right. Business owners are not looking for financial advisors to give them the life they want by making a killing in the stock market; these people have been able to create the life they want by themselves.

Successful business people want their financial advisors to show them ways to keep their wealth. In essence, successful people want their financial advisors to provide them with financial, tax, succession and estate planning holistic solutions. They don't need their advisors to sell them products such as stocks, mutual funds and life insurance to achieve their financial success. The point is they are already successful. Business people are looking for financial professionals who are positioned in the role of wealth manager. Someone who can see and understand the affluent business owner's big-picture needs by constructing customized strategies to achieve their specific goals of wealth preservation, avoidance of unnecessary tax burdens, creditor protection, wealth accumulation and wealth distribution to themselves, their family, estate and charities.

Successful business owners have an understanding that a financial asset is something that puts money in their pocket, with minimum labor. They understand that a business can buy a car, but a car cannot buy a business! Liabilities are things that take money "out of one's pocket." For example a home is a liability even though you own the property with no mortgage, you still have to pay property taxes, utilities, and maintenance.

There are numerous advantages available to those who own their own business, who take the risk and have the creativity and fortitude to do something on their own. These people are compensated for it. As an employee in Canada, one's equation of earning an income goes like this:

you earn;

you're taxed;

then you get to spend what is left over.

When one is a business owner and self-employed in Canada, our government allows you to adopt a much more favorable equation of earning an income:

you earn;

you spend, you income split, and you defer bonuses;

then you are taxed on what is left over!

Business owners are different from the rest of Canadians, if for no other reason the Income Tax Act favors people who work for themselves. The biggest expense we pay in a year is taxes. Reducing taxes is not only morally and ethically right, it is also smart. There are three easy rules that keep your money in your pocket in this country and not in the government's:

1. Find the right business structure for your business to pay less tax and protect what you have.

2. Learn to make more money by using the tax strategies of the rich such implementing health & welfare trusts, individual pension plans, retirement compensation arrangements, holding companies, charitable donations and estate freezes.

3. Pay less tax legally and still sleep at night.

The basis of success with working with a Certified Financial Planner is to have a financial plan. A true financial plan is more than simply buying and selling investments, or collecting "assets" that bring in no cash and are thus more akin to liabilities. The way most people invest, they might as well be driving in a circle. A true financial plan is mechanical, automatic, and boring. It applies "The Total Financial Planning Process."

Assess

Clarify your present situation by collecting and assess all relevant financial data, such as lists of assets and liabilities, tax returns, records of security transactions, insurance policies, will(s) and pension plan(s).

Prioritize

Decide what you want to achieve by identifying financial and personal goals and objectives. Work with your financial professional to help clarify your financial and personal values and attitudes. These may include selling your business, providing for children's education, supporting elderly parents or relieving immediate financial pressures to help maintain a current lifestyle and provide for retirement. These considerations are important in determining your best financial planning strategy.

Recognize

Identify and recognize financial problems that can create barriers to reaching your financial goals.

Understand

Understand your choices, your financial professional should provide you with written recommendations and alternative solutions. The length of these recommendations will vary with the complexity of individual situations.

Action

Implement the right strategy to ensure that your goals and objectives are met. A financial plan is only helpful if the recommendations are put into action.

Review

To ensure that your goals are achieved it is very important to have periodic reviews with your Certified Financial Planner and other financial advisors to see if there should be revisions to your plan. Successful business people in this world look for and build networks of experts to help them achieve their life and financial dreams. The key to managing your financial future is to plan for it.

All highly successful people I have every work with had a very clearly defined, written life, career and financial plan. They believed implicitly and unshakably in their plan and were impervious to external circumstances. So they didn't alter their plan every time the wind changed direction, and continued to work their plan steadfastly, no matter how long it took, until their plan inevitably succeeded.

Financial Planning Services - Get Healthy Present and Wealthy Future

2011-05-18T06:31:00.000-07:00

Financial world is growing by leaps and bounds and every second person is talking about tax-planning, investment, share market, bank savings account solutions, insurance plans and so many other financial terms. This is because planning of finances is imperative and without it you can develop unfriendly financial implications for you. All you need is a plan or a budget for your whole life and a financial planning services firm can help in that.

You would be working hard to make money but when it comes to the investment then problem arises. Sometimes you may get confused as how to maximize your net worth which is the main aim of a financial planning services firm. They build, protect and maximize the net worth of an individual, families or businesses. They suggest financial planning tools like bonds, equities, funds etc and also provide advices regarding some banking solutions and insurance plans for better financial management and savings.

Also, a financial planning services firm studies many aspects of your financial condition like financial objectives and goals and current financial position. Then it devises a finance roadmap or financial budget or you can say it a financial plan to help you to achieve those goals and objectives. These firms also can provide you best financial advices so that you can get a proper estate planning strategy, which ensure that your family and your estate are financially secure and protected for the long term.

Moreover, while opting for financial planning services firm make sure that it can help you regarding pension fund transfer, taxation planning, retirement planning, superannuation for business requirements etc. Planning of these aspects help a lot while taking a big financial decision. Furthermore, having a sound financial plan is also a great way to protect you and your family in times of financial adversity. You never know what is there for you in future. An accident, a job loss or a natural calamity can happen at any moment and it can change your life heavily.

So, have a sound financial plan for a healthy present and secure future and financial planning services assure that you have the same.

Financial Planning Services - Plan the Growth of Your Money

2011-05-17T09:45:00.000-07:00

Do our finance needs planning? Definitely it needs otherwise it would be very difficult to keep it on a right track. Suppose you are earning money easily but you do not know how to save it or how to invest it. You are watching various investment options but are confused as which would be the best option. Now, a single bad financial decision can result in poor profit and earnings. To avoid the situation like this you can utilize various financial planning services.

Generally, we can say that financial planning is a process of money management that includes budgeting, tax planning, retirement and estate planning, investment strategies and insurance. The services help individuals and companies change their financial future at the different stages of their lives. Financial planning firms suggest you various tools like bonds, equities, funds etc. They can provide better advices regarding banking solutions for savings and better financial management.

The financial planning services firm coordinates different elements of finances with the aim of building, protecting, and maximizing net worth of an individuals and companies. They provide proposals regarding financial issues like investment, retirement planning, estate planning and financial protection.

A question may arise as what process these financial planning services firm applies. First of all they clarify your present financial situation by collecting relevant information like net worth and cash flow statements, investment portfolios, tax returns, pension plans etc. Then they identify your both financial and personal goals and objectives like providing education to children or supporting elderly parents etc.

After that, financial planning services firm try to identify different financial obstacles then they design the plan. They provide written recommendations and alternative solutions. They implement the plan and lastly do the periodic review. So, these firms try to remove financial bottlenecks, if any, like too little or too much insurance coverage or a high tax burden.

Financial planning services ensure that you achieve your financial goals and your hard earned money is invested in better options. Thus, for providing right way to your finance you may utilize these services.

Traditional Financial Planning, Get A Planned Future

2011-05-16T06:35:00.000-07:00

Have you ever thought that what are your future financial goals and objectives? What are your specific plans for your lifestyle, retirement, investments, large purchases, savings, your family, your children's education and charitable activities? I hope that you must be confused and like you so many people are getting confused by the above questions. But, for all these questions there is only one answer that is traditional financial planning.

If you are a working couple then you must have plans regarding paying your various bills and educating your children. Apart from these daily issues you must plan for your retirement also. This is essential because in the old age you must earn and a pension plan can make that happen. Apart from pension plan a traditional financial planning may include many services.

Traditional financial planning may include the planning of retirement, insurance instruments and capital growth solutions. You must be focused for your past and next year's taxes, past accounting and current business plans but do you have concrete financial plans for the future that are realistic. Now, the traditional financial planning firms can provide consultation in financial, retirement and estate planning so that you can make solid financial plans at low cost.

There are many benefits of traditional financial planning. By doing it you can make your future dreams a reality by having a concrete plan for the future. Financial planning firms may advise you so that you can retire on time and work afterwards only if you want to. These plans can make you feel financially secured so that you can plan for your children's education, your retirement and your family needs.

Thus, for making realistic financial goals about present and future traditional financial planning is required. After all, your children deserve best of education and you deserve a retirement in which you are still earning.

Financial Planning Services - Spend Thousands & Save Millions

2011-05-15T07:25:00.000-07:00

We make money from more than one sources and it is necessary also to lead a good life. You too must be expanding your sources of income and you would be working so hard to do that. But do you think that you are doing a proper financial planning to manage your income, expenses, savings and investments. Financial planning services are effective tools for managing these issues and other finance related problems.

Financial planning services offer a range of tailored services to help individuals and companies change their financial future at the different stages of their lives. We can say that a financial plan is that guide which helps in managing wealth and expenses efficiently. Technically saying, financial planning is a process of money management that includes tax planning, budgeting, retirement and estate planning, insurance and investment strategies.

The firms providing financial planning services coordinate all the elements of finances with the aim of building, protecting, and maximizing net worth of an individuals, families and companies. Your wealth and investment plans can be managed in many ways. They suggest you financial planning tools like bonds, equities, funds etc. You can ask for better advices regarding banking solutions for better financial management and savings.

Financial planning services firms provide proposals regarding various financial issues like investing, retirement planning, estate planning and financial protection. After studying various aspects of your financial life like your current financial position, your financial objectives and goals etc. they devise a finance roadmap and implement it. They review their plan time to time to ensure that you are achieving your financial goals.

So, this is a highly process-centric job and financial planning services firm perform it very efficiently. Now, it has become easy to check various financial planning services over the Internet. You can choose the financial plan of your choice for leading a peaceful life without any financial problems.

Financial Planning Advice For The Average Guy

2011-05-14T06:43:00.000-07:00

If you are checking out for free financial planning advice to help reach your goals, here are some information you may want to check out.

In the first place, many people never reach their financial objectives for a very simple reason - they simply do not have a plan. In some worse case scenarios, they do not even know what they want.

The first thing you may want to change is your mindset and attitude. Start thinking like a financial planner, even if you are not one. This change in attitude alone can make a big difference to how you handle your financial affairs. You may have already heard - 95% of the population in this country (in fact, perhaps every country on this planet) will be poor and broke by the time they reach their retirement age. Sad fact, but the numbers do not lie.

What seems to be the problem? Obviously, it is the lack of a financial plan and lack of good financial planning advice. And the first bit of good advice is that you should actively manage your own finances. Try not to leave it to a financial planner totally. They are good at what they are doing, that is, to work out your financial plans and give good advice on financial products and services. However, the responsibility lies with yourself to actively manage your own investment portfolio to achieve the highest return possible. Of course, this should be done within the context of your own risk appetite.

Let's start with some advice you can use when starting to work out your own financial plan. Take some time out to work out a list of things that you want in your life. They can include major items such as the kind of house you want, the kind of car you like to drive, your favorite vacation spots etc. Quite clearly, they should of course include the usual monthly expenses that you incur each month.

Now go and list out all the expenses - both major and minor. Once done, you will have a clear idea of how much funds are needed for all these items. Do remember you need funds for savings and investments too. So do give good thought on whether all the expenses listed are really necessary in the first place. If not, it is definitely a much better idea to "spend" them to grow your investments and savings.

Here is another thing to note. Financial planning advisers can be great partners when coming to your personal financial planning. Their advice may not always be free (remember - the "no free lunch" adage still rings true), but the professional ones may be worth spending time and money with. But like I mentioned earlier, you still hold the responsibility to actively manage your own financial portfolio.

Just by getting in touch and working with a financial planner can and do help one to sort out his finances pretty quickly. But it is always advisable (and better) to be financially educated too. If you are financially well educated, you will be able to make good and profitable investment decisions. All rich people and the financially independent know a good deal about investment and money-making

Think about it - virtually all the rich and wealthy are financially well-educated themselves to be able to spot profitable investment opportunities on their own. Most of them are very conscious about financial numbers. If you want to be like them, the fast way to do it is to "model" them. Get involved and be very conscious of where your money is going and coming from. This bit of financial planning advice alone could prove to be very rewarding to your financial health.

You Will Need Financial Planning If You Want To Be A Millionaire

2011-05-13T01:35:00.000-07:00

Financial freedom is something that a lot of people want to achieve in their lifetime. Having to pay all debts and liabilities, enjoying all luxuries in life and enjoy life without to worry about any financial problems. More and more people are very interested in making their financial dreams come true. There are also motivation classes which main aim is not to discourage people from thinking that getting their first million dollar is possible.

As a financial planner, I am also aware that people usually do not quantify their goals. Having a goal of becoming a millionaire is something that is achievable and not impossible. I do have clients who want me to plan their millionaire journey. Having said that, a million dollar road map is easy to develop but very difficult to follow.

Before you can be a millionaire, you need to have a very good financial planning. You need to hire a financial planner to assist you as financial planners went through series of examinations and training perfecting their financial planning skills. It is impossible to be a millionaire if you do not have a financial plan.

Seminars on how to become a millionaire do not give you customized financial plan. You can be earning $ 200,000 per annum but if there is no financial planning, you will be asset rich and liquid poor. Managing your cash flow is the most basic element in financial planning.

One of my client, Mr Doctor (names are kept confidential), a doctor who has his own practice and earns $180,000 to $250,000 a year initially do not have any financial planning. He does have insurance policies and that was all. I had a hard time convincing him to meet me. He was very reluctant and told me that he already have a financial planner.

After much persuasion, I managed to meet him and assist him in his financial planning. I did a financial analysis on him and explained to him that financial planning is not just about insurance planning, financial planning also stresses on cash flow management, investment planning, child education planning, tax planning, estate planning and most importantly retirement planning.

After a year we had that meeting, he came back to me and told me that he now understand how important a financial plan is. He told me that he now can quantify his financial goals and he also told me confidently that he will be a millionaire in 5 years time.

I knew that after my appointment with him, he will identify his strength and weaknesses financially and able to quantify his goals. With my customized financial planning and financial planning tools, I am sure everyone will achieve their financial dreams.

Get on Track With Personal Financial Planning

2011-05-12T01:32:00.000-07:00

Personal financial planning is important, and one of the most important things you can do is to come up with a good budget. Every part of your financial life should be taken into account. If you are not careful to plan how you spend, then your personal financial planning may end up in disaster.

One great place to start is to find a quality budget worksheet or computer program. There are many free sites that offer these personal financial planning tools, but not every program is right for all individuals. You want a worksheet or program that takes into account all of the aspects of your spending. There are many small items that you may not think to include. A good program will lay these out for you.

When you are creating your budget, be sure to set aside a specific amount for savings as well as retirement. Even if you can only afford to set aside $5 or $10 a month into a savings account, it will be worth it. Small amounts will add up and you will have the satisfaction and security of watching your savings account grow. Many banks even offer to set up an automatic transfer of funds from your checking to your savings account each month for you. This is a great personal financial planning tool.

There are a few things you'll need to do before you create your budget. You will need to get together all of your bills, your bank statements, and of course your pay stubs too. This will ensure that your personal financial planning goes fast and smooth and you won't have to keep looking for another bill or another bank statement. You will also be able to get a better picture of your finances as well.

Make sure that all of your income sources are listed on your budget. Even if you have money you get from investments or a job on the side, you will need to list this income as well. Only when you get into the details can you make personal financial planning effective.

After you have listed all of your income, then it is time to list all of your expenses. Most people find this part of personal financial planning the hardest. Take into account all of your spending, not just the big things. Those daily lattes can really add up fast and ruin even the best laid-out plans. But, if you are honest in your budget, then you can plan for these small luxuries and stay on track financially.

A budget should be a living personal financial planning tool. Your life will change and so will your spending. Reviewing your budget monthly will help you stay on track and make any necessary changes. This will enable you to have peace of mind and stay within your means.

The most important personal financial planning tool available is a budget. While some people may see it as restrictive, it can actually provide you with the financial freedom you need. You'll know how much money you have and how much you can spend as well. So, as you can see, it is easier than you think to get started with personal financial planning.

Financial Planning Retirement Planning - You Can't Separate The Two

2011-05-11T06:51:00.000-07:00

So what do financial planning and retirement planning have to do with each other? The answer is everything. Simply, you cannot conduct your financial planning responsibly and effectively without also knowing where you want to be upon retiring. Your financial planning should merely be an exercise to help you get there.

Most people lose sight of their retirement, especially when it seems like a long way off; instead, they focus only on being able to acquire enough assets for the here and the now. Once they reach retirement, they realize they don't have enough money to retire on. Don't let this happen to you.

When it comes to financial planning and retirement planning, you may want to hire a financial planning advisor to help you achieve your retirement planning goals. Most people never take this important step, and therefore don't achieve their retirement goals. Of course, a retirement planning advisor will be helpful, but is not really necessary if you are financially educated yourself.

How can you become financially educated? There are many great books to read on the subject of an investing, whether it be real state investing, stock market investing, mutual funds, etc.

The most important thing is that you educate yourself financially when it comes to financial planning and retirement planning. Even if it seems like you don't have the time necessary to do this, helping your financial education is one of the most important steps you can never take in your life. Of course, if you absolutely don't have the time necessary, or really don't have the patience, then hiring a financial planning advisor will be well worth your effort.

Before you do so, however, have a plan in place for which you want to accomplish, because only then can a financial planning advisor really help you. Think about it: if you go to a financial planning advisor without having a plan in place, you won't know how much money you will need to live the lifestyle you want.

Without having goals already set, both now and in your retirement, how can your financial planning advisor ever help you get there? You would never get in your car and start driving without having a destination in mind, would you?

The bottom line is this: you cannot separate financial planning and retirement planning. The two are intertwined; therefore, whenever you are conduct your financial planning affairs, always keep in mind your retirement planning and what you want to accomplish for your golden years. You will be glad you did.