What is Personal Financial Planning?
Personal financial planning is simply expert guidance on personal financial decisions in order to satisfy life needs and goals. It may also include portfolio decisions and fulfillment of portfolio needs through various products or choices.
Why do I Need Personal Financial Planning?
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 Accomplish That Myself?
Perhaps, but will you? Most business people and professionals are finding it increasingly difficult to plan adequately for their personal financial growth and security. Among the most common reasons for their frustrations are:
- No time
- Too great a number of investment possibilities
- The complexity of ever-changing tax laws
- Complexities in employee compensation and benefits
In General, What is Included in a Financial Plan?
A plan may range from 50 to 150 pages, based on the complexity of circumstances and the degree of explanation and detail:
- Cash Flow Analysis
- Debt Management and Investment Portfolio Assessment
- Estate Planning Analysis
- Income Tax Projections and Planning
- Retirement Planning
- Insurance Evaluation
- Educational Funding Requirements
- Employee Benefit Analysis
- Closely Held Business Planning
What Role Do I Take in the Planning Process?
You and your spouse provide information about your personal and family goals, attitudes about taxes, indebtedness, investment risk and security. Your financial plan will take this information into consideration. You will also be called upon to update this data at least once each year.
Are Fees for Financial Plans Tax Deductible?
Typically yes. IRS Section 212 lays out the specifics as to what aspects of your investments and tax planning are deductible (and you planner should be able to assist in this).
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
- Provides growth and security for your family
- Broadening asset class structure to increase risk management
- Introduction to new investment opportunities
- Increased tax savings
- Selection of investment strategies are more closely analyzed
- Minimizes the negative effects of disability, early retirement, and death
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