by Jeanesse Whyte

Created on: October 01, 2008   Last Updated: May 29, 2009

INTRODUCTION

Are you thinking to buy a house, send your children to a good university or about a happy retirement? What do you do to reach your goals? Will you have enough money to do that? One intelligent way to achieve success reaching your goals is by using financial planning.

Financial planning is a process that identifying and planning your financial needs by the strategy of managing finances for obtain your goals. This strategy can integrate individuals or family financial goals. You can make your own financial plan or use a financial planner or advisor. In general, a financial plan gives directions and alternatives to take financial decisions at short, medium and long terms and their affects on all financial areas.

STARTING YOUR FINANCIAL PLAN

The first step is identify your goals. If you do not know what you want, it will be difficult for you. Your goals should have the following characteristics: specific, mensurable or countable, achievable, and time-bound. Some examples of financial goals are: buy a car, buy a home, and college education of children. Write down your financial goals in a paper, like this:
My financial goals, Date:

First column: goals, second column: short-term (one to three years), third column: medium-term( one to three years), long term (five or more years)

On the first column writes down your goals. Then, write the date that you would like to reach your goals, according to their duration in the corresponding column. Order your goals to the most important to less important.

GATHERING FINANCIAL INFORMATION

You have to gather your financial information, detailing all sources of income and summarizing your expenses: assets, liabilities, securities, pension plans, cash flow, insurance coverage, tax status, financial options, etc. Make a list with income and expenses and their values. Calculate the net worth that is equals: liabilities less assets. Keep your financial documents in order.

PICKING A FINANCIAL PLANNER

Are you sure what information is necessary? Do you feel capable of analyzing the information and making your financial plan. If you are not capable to analyze or you have no time. You should contract a financial planner. He or she helps you in every step of the process, analyze your portfolio, evaluate your investment risk level, retirement plans, give a tax advice, analyze changing in circumstances and contribute with the planning process.

A good financial planner has the following characteristics: knowledge of

• 1
• 2
• 3
• Next Page >>