Financial planning is the process of helping a person meet his life goals through the proper management of his finances. Life goals can include buying a home, saving for children's education or planning for retirement. The financial planning process consists of six steps that help take a "big picture" look at where a person is financially. Using these six steps, a financial planner can work out where a person is now, what he may need in the future and what he must do to reach his goals with the limited resources available to him.
The process involves gathering relevant financial information, setting life goals, examining the current financial status and coming up with a strategy or plan for how one can meet his goals given his current situation and future plans.
Financial planning provides direction and meaning to a person's financial decisions. It allows a person to understand how each financial decision he makes affects his overall financial position. For example, buying a particular investment product might help a person pay off his home loan faster or it might delay his retirement significantly. By viewing each financial decision as part of a whole, he can consider its short and long-term effects on his life goals. He can also adapt more easily to life changes and feel more secure that his goals are on track.
Financial Planners are the latest breed of professionals worldwide who through their own entrepreneurial practices or while working with banks/insurance or investment advisory companies prepare financial plans for their clients and help their clients achieve their life goals.
