Planning Overview: What Is Financial Planning?
The Financial Planners Standards Council describes Financial Planning as "the process of meeting your life goals through the proper management of your finances".
Financial planning looks at the "big picture" and considers all of your financial goals. Starting with an analysis of your current situation, realistic strategies are developed to realize your goals. Your Financial Plan coordinates all of your strategies to ensure that the steps you take in one area don't put you off course in another area. And because situations and goals do change, financial planning provides the flexibility to adjust your strategies to adapt to changing circumstances.
Financial Planning provides you with the tools to maintain control of your current financial situation and your financial future. You can effectively manage your debt and cash flow - where the money comes from and where it goes, and make informed choices when buying financial products and making investments.
There are two general ways to approach financial planning:
Comprehensive Financial Planning, where all aspects of one's financial affairs are dealt with and all areas as applicable to the client are addressed, and
Directed Planning, where the client wishes to address only one or a few of the areas of Financial Planning.
Since the actions taken in one area can impact other areas we strongly recommend the Comprehensive Financial Planning approach to ensure that strategies used in one area do not inadvertently impair the attainment of goals in other areas.
Who Can Benefit From Financial Planning?
If you are still in your earning years, financial planning can help you choose the best solutions to the financial challenges of major events such as buying a house, your children's post-secondary education, and your retirement. It can ensure you are prepared for financial emergencies, and that you and your family will be financially secure in the event of death or disability.
If you have already accumulated significant financial assets financial planning can help ensure that those assets are protected, continue to grow and are distributed in a tax effective manner and in accordance with your wishes at death.
If you are nearing retirement, or are already retired, financial planning can help you structure your retirement income to minimize taxes and maximize government benefits.
In short, Financial Planning can help most people at any stage in life.