Financial planning is the long-term process of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life.
Remember, financial planning is a process, not a product. What are the six steps in the financial planning process? Identifying and prioritizing objectives By sharing with the financial advisor your financial goals, the priority in tackling them can be set.Gathering information The financial advisor reviews your important documents, including bank statements, tax returns, budget, brokerage accounts, insurance policies, debt, and retirement plans. Analysis of information Gaining the big financial picture of your situation requires an intensive and methodical analysis of the information gathered about your goals and existing financial situation. Proposal of recommendationsContained in your written financial plan are accompanying recommendations that are in alignment with your goals and needs. Taking action Once your financial advisor proposes comprehensive financial solutions to reach your goals, it is time to take action on your goals.
Track ongoing progress As your needs and goals evolve over time, your financial advisor works with you to track changes and progress as a component of the continuing financial planning process.What do you consider as your most important goal in your financial plan? I consider the most important goal in my financial plan the managing the money and have it for future use. I want to be as successful as possible, and learn from mistakes I make. Who do you think financial planning is more important to: a millionaire or an individual who lives from paycheck to paycheck? Explain.
I believe that a person living from paycheck to paycheck would be more important because of needs and financial situation.If you have the money to do whatever you want, they are less likely to cost shop whereas a person living from paycheck to paycheck would be more considerate of what they spend, and decide what bills they pay this week, or what bills have to wait. What role do you think changing economic conditions (inflation, interest rates, consumer spending) play in financial planning? I think that changing economic conditions play a very large part in financial planning because inflating prices make it harder for some people to afford certain items, such as the price of fuel.Fuel has increased so rapidly that it is harder for people to afford to fill up their gas tanks, which in turn makes it harder for them to drive to work, which in turn can cause people to lose jobs, have less money to spend for other necessary things in their life.
In that said, consumer spending would be significantly less, less travel, less going out for dinner, and less spending in general. When consumers spend less say for instance in stores, vacations or fuel, the less businesses make which in turn more job cuts and then unemployment benefits which only last so long, then people become homeless, or result to crime.
