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The financial planning activities that can provide you a better financial future

While I was investigating financial planning activities I found that many financial planners tried to sell me on the idea that financial planning involved insurance, investments and retirement, and that planning these areas could help in reaching your goals.

Although there is some truth in that, it's not entirely so because as we both know there are many more things in our lives for which we must be prepared, so let's take a look at the main financial planning activities:

1. Cash management

This activity looks at how you manage your money now and how you should manage it, which also implies that you should know what you have, what you owe and how you spend what you earn.  Only in this way can you effectively control and manage your money.

The tools you need to effectively manage your money are your balance sheet, your income and expense statement and a budget.

2. Debt management

This activity involves paying the debts you now have and which you feel that are getting out of control, as well as planning debts that you're going to assume in order to acquire important possessions such as a house or a car.

3. Insurance planning

Because your life will bring some unavoidable events such as illnesses, unforeseen legal obligations, and death of all financial planning activities this in particular aims at providing protection through adequate insurance policies.

4. Retirement plans

This area involves making certain of your income when you retire and for this is it necessary to save part of your present earnings.  But, how much?  To determine this you need to estimate how much you will need during your retirement years and know about the different options which exist to save for retirement.

5. Investment planning

This area looks at you to invest your money according to your objectives, your risk tolerance, your financial situation, your tax situation all in tune with the investment vehicles which are available today.

For more information you can visit Lucky Dog Investing a beginners guide to investing.

6. Estate planning

This area deals with how to insure that your property is passed on and distributed efficiently to your heirs.  There are various options such as your will, trusts, and powers of attorney which can help you achieve your ends.

7. Tax planning

Taking into account that taxes affect most of what you do, an analysis of your tax situation is essential for your financial planning.

To reach your objective you need to optimize your tax situation through an adequate understanding of the tax laws and how they can affect you.

8. Other special situations

In addition there are other events which deserve specific planning, including: having a family, saving for their education, and also less pleasant possibilities such as major illnesses, divorce, etc.

In these events you will also need to modify and adapt your original plan according to your new needs and obligations.

So you see all your financial planning activities involve more than just insurance, investments and retirement.

All these is commonly known as comprehensive financial planning and are not always covered by most financial planners who usually are limited to just one particular field such as insurance, or certain investments.

For this reason, in our experience you should try to find a professional who can guide you in the majority of the areas we've mentioned because, as we've seen, sooner or later they will affect your life and when they happen you may find yourself under pressure which may not lead you to making the best decisions for your financial future.  Don't overlook these!  Prepare for them.

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