In discussing strategies for bankruptcy and debt management, the emphasis is mostly on the here and now. While reorganization plans may take up to five years to run their course and declaring bankruptcy can stay on one’s credit history for as much as a decade, many times, the petition for relief under bankruptcy or credit counseling is the only way to avoid foreclosure.
The term “financial planning” would seem to be fairly self-explanatory, and indeed, the definition probably does not stray too far from what the reader would imagine. Personal financial planning is a pursuit by which people, with the help of a licensed financial planner, can work towards realizing their long-term financial goals, following a step-by-step process by which they can form and enforce a plan of attack going forward.
Before making the plan, certain preliminary considerations and decisions must be made. Working cooperatively with their planners, parties must first be sure of what their goals are regarding their finances. From an ethics standpoint, planners may not force or coax clients into a course of action they don’t really want. Moreover, financial planners should take the lead on building accurate profiles of their clients based on their financial figures and their idiosyncratic qualities.
Frequently, personal financial planning is invoked in preparing a couple for retirement, making sure there will be enough money in the bank and investments so that they can live comfortable when the time comes for one or both of them to stop working.
Nonetheless, financial planning does have its applications at different stages in people’s life. For example, beginning in high school, middle school or potentially a younger age, parents may wish to outline how they will address sponsoring one or more children going to college, noting how expensive higher education can be in this day and age. Irrespective of the age of the client or the person who is the impetus for creating a plan, personal financial planning may also be a great bit of foresight in the event an emergency of some sort occurs.
In explaining financial planning, it is assumed that people who go this route would naturally seek the services of a licensed financial planner. Though it is generally recommended that individuals hire someone with whom they can have face-to-face interaction regarding these matters, available finances or other concerns might discourage some prospective applicants from paying for the services of a flesh-and-blood expert. Still, this does not mean they are on their own. As with programs designed for computing taxes, numerous companies make software for do-it-yourself personal financial planning.