planning activities that can provide you a better financial
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
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
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
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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