Traditional financial planning is all about math and money. You look at how much you earn, figure out how much you will need in the future to maintain your desired lifestyle and try to come up with an investment plan that will help you reach the magic number that will allow you to retire. The process is generally about as exciting as balancing a cheque book and as emotionally draining as paying taxes. Unfortunately, many people choose not to deal with it all, preferring to put off worrying about the future until it arrives.
However, there's a quiet minority of investors that are taking a different approach.
Modern Financial Planning is different than Traditional Financial Planning because the focus is more about who you are and who you want to be than it is about money. Unlike people engaged in the traditional planning process, people engaged in the life planning process don't look ahead in an effort to figure out how to maintain their current lifestyles in retirement. Instead, they look at how to change their current lifestyle to achieve the lifestyle of their dreams.
Financial Planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a house, saving for your child's higher education or planning for retirement. The Financial Planning Process consists of six steps that help you take a 'big picture' look at where you are currently.
Benefits of Financial Planning
Financial Planning provides direction and meaning to your financial decisions.
It allows you to understand how each financial decision you make affects other areas of your finances.
By viewing each financial decision as part of the whole, you can consider its short and long-term effects on your life goals.
You can also adapt more easily to life changes and feel more secure that your goals are on track.
It will help you identify risks you hadn’t thought of.