Financial planning is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals. As a result, financial planning often delves into multiple areas of finance, including investing, taxes, savings, retirement, your estate, insurance and more. Putting it simpler it is about how you see yourself. The impact you want to make. The legacy you want to leave.
Why is financial planning important?
Each person needs to be aware of their financial plans. Financial planning can help you figure out problems in a far more effective way. It can better prepare you to deal with scenarios and circumstances that may require immediate financial assistance. A qualified financial adviser is essential to help guide your financial decisions.
Building the legacy through financial planning
Building wealth relies on proper financial planning, to clearly define future financial goals. The process of creating wealth starts with “seeds” of wealth which will then help build wealth-creating assets such as property, investments and anything that has a monetary value that can be passed on from generation to generation. Central to this process is the financial advisor that will help to guide the process. The financial advisor will be able to assist you with a financial needs analysis that will give you a sense of where you are in your financial journey. It is from this point that your journey of creating wealth begins. It is important to note that anyone can have a financial advisor. Below is a process of creating wealth.
Setting Financial Goals
Financial goals can be set as short term, medium and long term,
- Short-term financial goals are six months to five years.
- Mid-term financial goals is five to 10 years.
- Long-term financial goals are more than 10 years.
The goals must be Specific, Measurable, Achievable, Relevant and Timebound (SMART). See below the steps to be followed when setting financial goal
- Write you are your financial goals down.
- Make the goals specific.
- Make the goals measurable.
- Give yourself a deadline.
- Make sure they are your own goals.
- Create and stick to a budget.
- Build up an emergency fund.
- Get out of debt.