Peter Wachira

Importance of Financial Planning Financial planning is creating a comprehensive picture of your current financial status, defining your financial goals, and analyzing the strategies you have set to meet these goals. Financial planning prepares you for unexpected eventualities such as serious illness, untimely death, sudden loss of employment, etc. A good financial plan should include details such as savings, cash flow, investments, debt, insurance, and other factors of your financial life. Working with an excellent financial planner will help you achieve your financial goals, such as children's higher education, home purchase, retirement planning, estate planning, and long-term financial security. Why should I make a financial plan? Financial planning is a continuous process that helps to reduce stress about money. It enables you to support your current financial needs while safeguarding your long-term goals, such as retirement. Having a financial plan is vital because it allows you to make the best use of your assets. It helps to ensure that you meet your future goals and encourages you to weather the bumps along the way. Although you can make a financial plan yourself, it is best if you got a professional financial planner to help you out. If you want to achieve financial growth, then your money needs to grow faster than inflation, as it reduces the buying power of money. It would be best if you planned for certain expenses like medical and education which inflate faster than inflation. The rising cost of living and lifestyle changes come with more expenses, and it is not easy to change your lifestyle once you are used to it. If you want to maintain your lifestyle, then you need to save more to achieve financial independence. What are the main points of financial planning? When you are creating a long-term comprehensive financial plan, it is essential to have a preliminary plan. It is important to understand that priorities, challenges, and financial circumstances may change over time. Setting goals and creating a blueprint for investing and saving is the first step toward a more significant financial journey. As you start the financial planning process, it is essential to remember that it is supposed to help you realize and enjoy financial security by achieving your goals now and in the future. The main points of financial planning include: Financial statement preparation and analysis Insurance planning and risk management Employee benefits planning Investment Planning Income tax planning Retirement planning Estate planning What is the financial planning process? Defining and setting goals – This involves working with a financial planner to determine your goals, the timelines for achieving them, and quantifying them while factoring in inflation. Expense budgeting – You will require to save money for your financial goals. By budgeting your expense, you will determine how much you spend and which expenses to reduce so that you can save more. Assessing the risks – In this step, your financial planner assesses your risk appetite depending on your age, expenses, income, and loans. Your financial planner will also evaluate your risk tolerance based on how you would react to adverse occurrences. Asset allocation – Asset allocation refers to different asset classes that you have invested in, such as fixed income, equity, and gold. Asset allocation is vital for risk variation and attaining your financial goals. Your asses allocation depends on your risk appetite and financial goals. Investment plan – Investment planning is knowing where and how much to invest. It can mix hybrid funds, debt, and equity, depending on how you want to allocate your assets. Risk protection plan – Certain eventualities, such as a severe accident, critical illness, or even death, can result in acute financial distress to your family. Risk protection is essential for your financial plan; you must have a sufficient amount of health and life insurance coverage. Monitoring and tracking – You need to continuously track the progress of your financial plan toward the different goals and take any necessary actions. Your goals may change over time, so you must make the necessary changes to your financial plan accordingly. Hire an Expert Financial Planner Conversion Financial Services is the best choice if you are looking for a financial planning firm in St. Louis, MO. We adhere to the CFP Boards process for building customized financial plans for our clients. Our highly-qualified professionals strive to understand your personal and financial circumstances and identify your long-term and short-term financial goals. Contact us at - or - and we will develop a financial plan that will make you maximize your potential and achieve your goals.