Financial planning has become a catchphrase in recent years, and it’s something many consumers may not fully understand. Learning some key components of financial planning can help people have more capital on hand to help them achieve their short- and long-term goals.
A 2018 study commissioned by GuideVine that polled 1,000 Americans 30 and older about their finances found that many lack knowledge of basic financial terms. In addition, the study found that numerous people feel completely lost in regard to having a solid plan with their money. Financial planning can be intimidating, but learning the basics of sound money management can help people secure their financial futures.
According to the online learning resource WiseGeek, financial planning is a process of setting objectives, assessing assets and resources, estimating future financial needs, and making plans to achieve financial goals. Investing, risk management, retirement planning, tax requirements, and estate planning are key components of financial planning.
To get started with financial planning, the financial guide and online resource Ramsay says individuals will need to see where they stand financially, establish financial goals and create a plan to reach those goals. While a person can create his or her own financial plan, oftentimes the help of a financial planner can make sure that all avenues are being explored, especially for financial novices.
It’s important to note that financial planning may mean different things to different people. For some, planning may revolve around saving for a child’s college tuition but still having enough money left to retire. Another person may be looking to save extra money to invest in a business venture. Others who are living paycheck to paycheck may need help reevaluating their spending so they can grow their savings.
One of the key components of financial planning is to begin doing it as soon as possible. A financial plan can be instituted at any age, and goals can be revisited as life changes occur.
Financial planning strategies are something anyone can learn and utilize to secure their financial futures.
Theresa Flerx is an editor and reporter for The West Virginia Daily News family of newspapers and an author of books of nonfiction and fiction. She has a degree in Criminal Justice Law/Enforcement. Flerx has won awards from the West Virginia Press Association and WV Writers Inc. 2015 Writing Competition.