Alexandra Armstrong: Hi! I am Alexandra Armstrong and I am a member of Financial Planning Association. I am here to discuss the basics of financial planning. Right now, I am going to talk about developing a financial plan.
This is the step that puts the plan in financial planning. This is where you and your planner devise a specific tactics that you will use to pursue your goals. Depending on exactly what those goals are, your strategies may include things like building an emergency fund, establishing a spending and savings plan, beginning an investment program or readjusting your current investments. Purchasing disability or long term care insurance, drafting a will, establishing a trust, or developing a business succession plan.
What makes financial planning effective is that it takes this systematic holistic approach to whatever needs you have. Recognize that each financial element of your life, investments, insurances, taxes and so on are interlinked. Let's assume this time that you would like to take six months off from work so you can spend time with your sick parent. At the same time your children's tuition bills are starring you in the face. Let's also say that each goal is equally important to you. You don't want to scale back on either one. So you decide to take money from another goal, your retirement savings. As you all can probably recognize, this would create an impact down the road. It may mean that you have to learn to live unless or may be that you have to postpone your retirement date to makeup for the shortfall. The point is that a good financial plan takes into an account the relationship between your goals and addresses specific needs within the context of a larger financial picture. A qualified financial planner is a best person to address any questions or issues you might have with your financial plan. Now that you know how to develop a financial plan, let's talk about implementing the plan.