Why Financial Planning Is Important

Why Financial Planning Is Important
December 17 00:27 2017 Print This Article

Financial planning is not about socking away money in a bank account. It involves identifying your financial goals during different stages of your life. Therefore, a financial plan is established to meet your financial objectives throughout your life. These stages include young to mid-life, mid-life, pre-retirement, and retirement.

During each phase, the financial planner should provide advice, outline the risks, and communicate the weaknesses and strengths of your financial plan. A financial representative cannot ensure that the investments you make will always be favourable.

Initiating a Plan

When you are young and initiating a financial plan, you may be concerned with the following areas:

  • Purchasing a home
  • Paying off your HECS (Higher Education Contribution Scheme)
  • Getting married and having a family
  • Family healthcare
  • Business planning solutions

Mid-life Solutions

During mid-life, you may use the services of a financial planner in Melbourne to protect your lifestyle choices. Therefore, you may want to focus on the following:

  • Healthcare
  • Investments
  • Financing home upgrades
  • Debt management
  • Retirement planning
  • Long-term care planning
  • Income protection
  • Tax management

Pre-retirement

Most people who are in the pre-retirement phase of life will be working about 20 more years. Therefore, your concerns may include the following at this time in life:

  • Eliminating debt
  • Obtaining sufficient healthcare
  • Assisting children with their financial needs
  • Planning for retirement
  • Creating a will or trust
  • Planning a business exit strategy

Retirement

During retirement, financial planning may cover the following goals:

  • Asset protection
  • Healthcare
  • Aged-care planning
  • Inheritance tax planning
  • Capital preservation
  • Estate planning
  • Travelling

As you can see, financial planning covers various components during different stages in life. Therefore, the goal of financial planning, during any stage of life, is to stay updated.

Consequently, it is a financial planner’s responsibility to keep his or her client’s current about their investments. He or she should note any changes that could influence a client’s financial status.

Creating a Financial Plan

When creating a financial plan, you may want to consider the following:

  • What are my current financial needs?
  • What will my financial needs be five years from now?
  • Do I feel comfortable with a high-risk investment or would I rather place my money on a lower-risk holding?
  • What financial goals have I set for my children? How can I meet them?
  • How do I want to plan for retirement?
  • What is the best way to fund a new business?
  • How much will I need to put down on a home?

Staying on Track Financially

As you can see, you have a great deal to contemplate when you are establishing a financial plan for yourself and your family. By relying on financial planning services, you can make more sense of what works for you and stay on track with building wealth and realising your financial goals.

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Clare Louise
Clare Louise

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