Easy To Understand Outline of Financial Planning

Easy To Understand Outline of Financial Planning

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Easy To Understand Outline of Financial Planning
All too frequently there is a fine line between having concerns about money and making payments on bills/debts, and finding oneself in financial peril, facing debt restructuring or even bankruptcy.


Background


While some strategies of financial management are grounded in one's immediate circumstances, most notably bankruptcy, financial planning is focused on the years to come and being prepared accordingly. Personal financial planning is, therefore, a forward-thinking approach to one's finances.
Ideally, financial planning will be conducted in an orderly fashion, according to a carefully constructed financial plan. Likewise, ideally a trustworthy financial planner will work together with individuals/couples/families to hit their target financial objectives in a way that is most suitable given their means and personality. 
Commonly, financial planning will be used by adults as they grow older in anticipation of retirement and the litany of issues that come along with it. That said, financial planning is a rather broad category, encompassing a variety of different money management skills (e.g. risk management, planning surrounding one's estate) and stages in one's life (e.g. college and funding education, date of eligibility to withdraw from 401(k) plans).


Financial Plans
Once clients have identified their goals regarding their finances, it is up to them to design a financial plan (with the aid of a financial planner, of course) that will get them to their destination, so to speak.
Financial plans should not be a generic set of solutions handed down by planners to which customers are forced to adapt (although adaptation in the form of learning to deal with changing circumstances in life and fluctuations in the various financial markets is a priority). They should be specific to clients' situations and also reasonable, actionable ways that they (the clients) may follow a path to success.
Though it likely goes without saying, organization is also a fundamental quality of good financial plans. Part of this sound attention to detail is going through seemingly menial tasks like creating a budget so that absolutely all concerns individuals and families may face are kept in mind, especially basic, everyday expenses that tend to be afterthoughts for some investors.
Certainly, though, detail-oriented does not imply rigidity by any means. Thus, while financial plans are to be followed as drafted, they should also be capable of being reworked to reflect major shifts in people's lives, especially those that turn out for the worse. 
Financial Planners
As noted above, it is wholly possible for someone to go it alone and not hire a professional financial planner. All the same, with the expertise of licensed financial planners in these matters, many people naturally seek out their assistance in devising a plan to handle their finances in the short- and long-term.
The duties financial planners are tasked with are manifold and wide-ranging, but overall, these professionals must use a firm hand to steer their clients in the right direction and ensure that their clients understand the motives for approaching their finances as is agreed upon in the financial plan, using clear, concise language and giving non-confrontational advice.
In fact, good financial planners, living up to their professional namesake, will be critical in assisting the people they represent for the knowledge they have acquired through their training in the major areas of financial planning and money management, as well as their expertise in creating plans for others.
Working directly for their clients' benefit, planners should operate with the mindset that they are trying to put their customers' assets in their most valuable light. At the same time, they should empower their clients to take an active role in handling their financial affairs whenever possible.  
Certified Financial Planning Programs
Of course, it would not make sense to trust just any financial planner or financial planning program with one's hard-earned money. Though availability of that money to cover the nominal fees in compensating planners might be a concern, every effort should still be made in trying to align oneself with a certified financial planning service. Accordingly, there are several prominent authorities that should be able to direct investors to trustworthy organizations, or at the very least, highlight disreputable companies, thereby weeding them out. The Better Business Bureau, as an agency with oversight of all buyer-seller business interactions, is a useful resource in terms of offering general guidelines for what to look for when assessing a financial planning adviser.
Other groups that may counsel consumers on these matters may lack the reputation of the BBB, but more than make up for it based on their level of specificity toward the topic of financial planning. For one, the Financial Industry Regulatory Authority (FINRA) is devoted to the promotion of fairness and ethics in securities firms' business practices. As investment planning and management is a critical part of preparations for retirement, individuals looking for a connection to a certified professional might employ FINRA in this search.
Better yet, the Certified Financial Planner Board of Standards accredits financial planning programs across the United States, so investors would be wise to look for services with a Certified Financial Planner seal of approval. 


Specific Planning/Management Skills
Obviously, financial planning is more than just creating a budget and maintaining it. Within an actionable financial plan, many strategies that are likely to be unfamiliar to clients and yet patently useful may be suggested by financial planners in the planning process.
Certainly, management of risk, liability and other forms of uncertainty should be a top priority for applicants, especially if their age or line of work lends itself to risk. Possible methods/skills to be used to combat the unknown are diversity of investments (i.e. the creation of a portfolio) and accurate assessments of the value of assets with built-in contingency plans should their worth deflate.
Additionally, financial planning skills should also aid and educate clients on a number of different types of planning that should be of concern as time goes on. Retirement planning should be high up on many people's agendas, and by virtue of this, financial planners should stress the importance of putting funds in an individual retirement account or 401(k).
Truly, all aspects of one's finances at all stages of life are to be considered in the planning stages. Among the other skills that would seem to fall under this grouping include family planning, educational planning (for children attending college), real estate planning, and tax planning (for the reduction of tax liabilities after one ceases to earn a regular wage).

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