What Does Financial Planning Mean
Financial planning is key to a brighter future. The ultimate goal is to achieve personal economic fulfillment. You truly want to manage your money so that your money takes care of you, not just now but in the future.
As with anything in life, planning is key although being spontaneous has its advantages but not when it comes to your financial future. The most important tool to use is a "budget." Budgeting allows you time to figure out how to allocate funds now and in the future. You allot for expenses such as rent and utilities while also reserving funds for short and long term savings.
Financial planning in a nutshell is to determine your current financial situation, set goals, and identify alternatives to your plan which means taking into account different life situations, personal values and other economic factors. Then you want to implement your plan, review it and revise when needed.
Personal budgets can be difficult for some because it is difficult enough trying to make ends meet when underemployed, unemployed, and so forth. However, even if you are not able to save for bigger ticket items or for a well off retirement, still financial planning is important. If you had only $1200 to work with and to make it last for one month - the best way to make sure the most important things are covered is by creating a budget, sticking to it and then moving forward from that point. This is "financial planning."
Did you know that the average U.S. household owes about $8,000 in credit card debt based on information found under Georgia Career System and if we do not start being our own financial planner and creating financial plans we are headed for financial ruins? Here is how to start "financial planning" in your life: know your income and expenses; have access to required records and receipts; calculate amount of debt and funds available; figure out payment priorities and a method to pay them off; contact creditors to set up payment plans; research investments and savings plans; and before long you will be your own financial counselor who have mastered financial planning.
Planning of any sort tends to help put things in order and by understanding what financial planning means, you will find that your life will have added direction and meaning because you would have a handle on your financial decisions. It teaches you self constraint or how to postpone frivolous spending when you have a bigger picture in mind. Think of grocery shopping when hungry - you tend to put things in the cart you would never add had you not been hungry. The same thing happens when there is no financial plan in your life. When extra money comes in there is the tendency to spend it on "extra" things that you never anticipated on spending it on. This money could have been saved or invested or allocated appropriately so that on a rainy day you have something to fall on.
Consider financial planning as something needed in life like sleep and before long it will become second nature.