Northwestern Mutual: Every year, millions of Americans struggle with financial matters such as getting out of debt and saving for the future. To provide them with guidance, financial planners offer services that assess their individual financial situations, looking at where they are currently and where they want to go. Then financial planners help to develop customized plans tailored to reach a client's goals. To put it simply, a financial plan is a roadmap to help someone reach their financial goals. But what does that look like? The following are four key aspects of financial planning:
Financial planning is about setting goals and working towards them. A financial planner can ask a client questions about their goals and help prioritize which ones they want to reach first. For example, do they want to buy a home, retire early, or build a college fund for their kids?
Through understanding goals and priorities, a planner can help clients come up with a plan to enjoy their money now and work toward goals in a timely, achievable way.
It's tailored to the individual
Financial planning is not a one-size-fits-all endeavor. A financial planner will tailor solutions in a plan to a client's unique financial situation. This means taking into account their entire financial picture and recommending solutions to match.
By getting a clear picture of their finances, financial planners can work with clients to make informed decisions about how to best use their money to work toward their goals.
It looks at finances from multiple angles
A financial plan looks at both the present and the future. Often, a financial plan will include several different aspects, including things like building an emergency fund, developing a plan to pay off or manage debt, estate planning, retirement planning, ways to grow wealth over time, and more. But it should all be balanced with what someone needs today and tomorrow. And knowing that future goals are planned for often gives someone confidence to spend money now.
Perhaps most importantly, financial planning is flexible over time in that it can be adapted to suit changing needs and circumstances. Income, debts, and expenses can change, and life can throw unexpected curveballs that can impact finances. For example, it's not unusual to experience a large, unexpected expense or a dip in income. It's equally as common for priorities to change over time, necessitating an adjustment in financial goals. By regularly reviewing a client's financial situation and making adjustments as needed, a planner can help clients stay on track to meet their financial goals.
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Original Source: Northwestern Mutual: What Is Financial Planning?