Personal Financial Planning is not simply just about buying insurance or planning a budget, it covers a wide range of topics including financial health,taxes, estate planning, investments, loans and more. In a nutshell, financial planning is making sure you attain your financial goals while protecting your wealth.
The simplest and most essential financial goal that most people should have is retirement planning. To effectively plan for retirement, financial planners will run through a step-by-step process to determine the amount of money required for retirement and how to achieve it. Other financial goals may include saving for child’s education, saving for a house etc.
To figure out your financial health, financial planners will prepare a detailed financial statement analysis of the cash flow statement and a statement of your net worth. By applying certain assumptions, the amount of money required to meet your various financial goals can also be determined.
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Budgeting is used to allocate income and expenses accordingly to avoid overspending. Following a budget will also ensure that you are saving methodically towards your goals.
Investments are required to cover for inflation as well as accelerate the accumulation of assets. This can be done through investing in a diversified allocation of assets.
Insurance planning is to make sure that while you are saving towards your financial goals, your family’s needs are covered should anything happen to you before you achieve your financial goals.
Finally, estate planning is required to ensure that your assets are distributed according to your wishes.
Personal financial planning is very comprehensive and covers a wide range of topics. Hiring a certified financial planner to do your financial planning can be a rather costly affair due to the amount of time and effort required. DrWealth provides all the financial planning tools you require for Free!
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About the Author
Calvin Yeo is the Managing Director of Doctor Wealth Pte Ltd (www.drwealth.com), which is an online financial planning platform aiming to provide private bank standard financial plans at affordable prices. He is also a Chartered Financial Analyst (CFA) as well as Certified Financial Planner (CFP).
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