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What is #FinancialPlanning ?
Financial Planning is all about "Planning" your finances well ahead of time. If the planning is done diligently and systematically only once in her life, it will show a roadmap to her portfolio and investments in tune of her goals, both Financial Goal and Personal.
There are 6 basic Steps of Financial Planning:
There are 6 basic steps of Financial Planning which are:
1. Identify and Prioritize Objectives:
The first step is to Identify the Financial Objective of a Person's Life and then Prioritize it according to her own priorities in life.
This is to WRITE down the Financial Goals of a person's life in a S.M.A.R.T. <Specific Measurable Achievable Realistic and Timebound> format. If a Goal is now written down, it is considered as a Wish and a wish may or may not be fulfilled.
Now, Goals need to be SMART Goals for the #FinancialPlan to be worked out. Any goal which is not Specific Measurable Achievable Realistic or Timebound is not Smart and does not qualify to be a part of the #FinancialPlanning Process.
2. Gather Information:
Now, this is a step for #FinancialPlanners more from gathering information so as to be able to do the Process of #FinancialPlanning for her benefit. Now, even if she is doing her own Financial Plan, gathering her own information about her own self is very important.
Now from #FinancialPlanningPerspective gathering information is the key to a successful Financial Planning. If this step is done well and very diligently, then the First Threshold is crossed.
3. Analyse Information: This part is done by a professional and is a crucial step as the information needs to be analysed well so as to represent the correct figures of the cash flow and the #FinancialPlanning.
4. Propose Recommendations: This is when the #FinancialPlanner makes changes in the investment pattern, tools, timelines or anything else to propose a "SOLUTION" instead of products. This is when the WIIFM needs to be kept in mind and changes need to be proposed in an unbiased manner.
WIIFM: What's in it for me? i.e. What is in the plan for you and not for your #FinancialPlanner. If the plan has been derived keeping the client's goals, objectives of investments, risk profile, etc. in mind, then it is beneficial for her else it does not suffice a purpose. Thus, a pure professional will plan her #FinancialPlan keeping the end objectives and risk profile in mind.
5. Take Action: This step depends on you. Whether you wish to take the action or not. Whether you would want to follow the plan to achieve your own goal based on your means and risk appetite. Thus, this step starts the process of "PLANNING" since the plan without an action is of no use at all. Once she starts to follow the plan, it is the beginning of a process and needs to be attended to very carefully.
6. Track Ongoing Process is actually Reviewing the Process maybe yearly or half-yearly.
Thus #FinancialPlanning is a
- Systematic
- Scientific
- Written Down
- Objective Oriented
That it "What is Financial Planning? ", Hopefully it can give information For you. Thanks YourInsuranceStep Update.