Personal Financial Planning

What is Personal Financial Planning?

Personal financial planning is guidance by a licensed financial professional on the financial decisions faced by individuals. It includes portfolio allocations, future planning decisions, goal setting, and exploration of different investment vehicles.

Is Personal Financial Planning Necessary?

In order to sufficiently organize your finances in such a way as to reduce taxes, maximize investment opportunities, save time, and appropriately distribute risk, you should engage in at least some form of personal financial planning.

But Can’t I Just Do It Alone?

Possibly, but will you? Most professionals and business people have found it increasingly difficult to do their financial planning on their own. The most common walls to planning on your own are:

  • Insufficient time
  • Too great a number of investment possibilities
  • Tax laws change to frequently to keep up
  • Untangling employee compensation and benefits

What is Typically Included in a Financial Plan?

The length of the plan is based on the complexity and details required for each individual’s circumstances. The typical plan can range from anywhere between 15 to 200 pages and includes:

  • Cash Flow Analysis
  • Debt Management and Investment Portfolio Assessment
  • Estate Planning and Liquidity Analysis
  • Tax and Planning Projections
  • Retirement (forecasting benefits, costs and options)
  • Insurance Needs (life, property, casualty and disability)
  • Educational Funding
  • Employee Benefit Analysis (coordinate personal holdings)
  • Business Analysis (if applicable)

What is My Role in the Planning Process?

You and your spouse obviously have a crucial role in the planning process. The plan is custom built to your specific circumstances, and as such should include specific aspects of your life. You should make sure that your planner understands you attitudes, goals, risk tolerance, and security needs. The more the planner understands you, the more customized your plan can become.

Are Fees for Financial Plans Tax Deductible?

Yes. Expenses for investment and tax planning are deductible as itemized expenses, subject to limitations – IRS Section 212.

How Can I Measure the Worth of Financial Planning?

Once the planner has assessed your situation and made recommendations, you should be able to compare the projections with the cost of the analysis. Your planner should have presented data that more than paid for the expense of the plan.

Will Personal Financial Planning Make Me Rich?

Regrettably, get-rich-quick schemes generally don’t work. This makes personal financial planning all the more important. Proper planning will help you keep more of what you earn and assist in helping your money work harder for you. It will do this by:

  • Increasing the productivity of assets
  • Providing financial and emotional security for your family
  • Broadening asset structure to reduce risks
  • Providing participation in new investment opportunities
  • Increased income through tax planning
  • Investment alternatives are provides closer inspection
  • Minimizes the negative effects of disability, early retirement, and death