Financial planning is a comprehensive approach to working toward reaching important financial goals. During the financial planning process, a person takes inventory of their finances, identifies their financial goals and creates a strategy to work towards reaching these goals. A financial plan acts as a roadmap that guides individuals towards reaching important monetary milestones and striving to achieve financial success. There are multiple essential components to a financial plan that should be thoroughly reviewed during the planning process.
Benefits Of Financial Planning Services
There are numerous benefits that come from developing a solid financial plan. Financial planning can aid in goal setting and can be an excellent source of motivation. It can also assist in decision-making and provide a guide for action. Financial plans can be used to work towards setting performance standards and can potentially help improve financial outcomes. As everyone’s monetary goals are different, no two financial plans are the same. However, most financial plans have similar characteristics. A comprehensive financial plan may include goals regarding investments, retirement planning, insurance, estate planning and taxes.
Financial planning is not just about investing. Instead, it is a method that can encourage individuals to make sound financial decisions. A person does not even need to have a lot of money saved to benefit from financial planning. The process of creating a financial plan can even help people in lower-income households improve their budgeting and saving habits by prioritizing goals and finding effective ways to measure success. For those struggling to get started with financial planning, consider working with an experienced financial planner to stay focused. Here is a closer look at some advantages of financial planning services and what to expect when hiring a wealth management advisor.
Planning For The Unexpected
Financial planning also involves planning for the unexpected. Situations can occur at any time that a person may not expect, such as pregnancy, accident, illness, marriage or new career. When these types of scenarios occur, it can be helpful to have an emergency fund available to pay for unplanned expenses. A financial plan works towards giving individuals the resources needed to handle whatever unexpected event occurs without worry or financial hardships. An experienced financial planner can help determine if a plan is adequate based on a person’s unique lifestyle, health and similar factors that could increase their risk of encountering unexpected events.
Getting Out Of Debt
The total amount of U.S. consumer debt surpasses $13.86 trillion and more than 189 million Americans have credit cards, according to America’s Debt Help Organization. While many people would like to become debt-free, it can be challenging to reach this goal without a solid plan in place. Financial planning can help individuals create a strategic plan for getting out of debt in a way that is realistic and achievable within a given timeframe. This typically involves creating a budget, tracking income and expenses, and making decisions that help debtors stay on track and reach their goal.
Allocation Of Assets
Asset allocation is the process of choosing asset classes that best match an investor’s profile based on risk tolerance and investment preferences. By investing in multiple asset classes that offer varying cycles of performance, the returns on said investments are striving to include a well diversified portfolio. Allocation of assets is an important component of financial planning and should strive to reflect the investors investment objectives and goals. However, asset allocation requires periodic reviews to maintain a balanced portfolio. Different life stages can result in changing priorities, preferences and risk tolerance changes which may impact an asset allocation strategy.
Tax Advantages
Financial planning can also be an effective way to review tax-related expenses. Individuals could anticipate significant changes that may impact their income or expenses, such as a job change or the addition of a new dependent. These types of life changes can also impact a person’s tax obligations. Tax advantages are often designed to encourage progress towards certain goals, such as buying a home or investing in energy-efficient home upgrades. Retirement saving is also encouraged; therefore, some savings plans such as 401(k)s help create tax advantages.
Speak To Wealth Management Advisors
Financial planning is suitable for everyone, whether the person is between jobs, raising a family, starting a business or is already in retirement. A financial planner can assist with all types of financial topics, such as health planning, insurance planning, gifting strategies, estate planning, education fund planning and professional money management.
It is important to remember that financial planning is not a one-time event. Financial plans should be continually reviewed and revised as a person’s life changes and new events occur. For more information about wealth management or to speak with an experienced wealth management advisor, contact Campbell Wealth Management by calling 703.782.5058 or by requesting a consultation online.
This content is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Individuals are encouraged to consult with tax of legal professional before making any decisions about their personal situation.
