Financial Planning 101

Monday, 31 Jan 2011 11:21 AM

By Ronald Kessler

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A financial planner or personal financial planner is a practicing professional. The financial planner helps customers or clients address their various financial issues. Certified financial planners help customers achieve their financial goals through proper planning. The various activities undertaken by the financial planner towards this end are collectively referred to as personal financial planning.
 
Understand various types of personal financial planning:
Important personal financial activities include cash flow management, educational planning, retirement planning, investment planning, insurance planning, tax planning, and business succession planning (if the customer is an entrepreneur).
 
Choose a certified financial planner:
A financial plan can be a budget or a plan for spending, saving, or investing. This is why accredited professionals are needed to advise customers about their financial planning. Such professionals are called Certified Financial Planners (CFP).
 
Certified Financial Planners, or CFP,  is a designation awarded by the Certified Financial Planner Board of Standards, Inc. (CFP Board). The CFP Board is a non-profit certifying and standards-setting body that regulates Certified Financial Planners.
 
Live within your means:
The basics of financial planning have remained constant for ages: you have to learn to live within your means. With financial planning, people can calculate their likely cash inflows and definite cash outflows. There is always a certain level of uncertainty concerning inflows. However, cash outflows are certain and inescapable!
 
Manage credit:
Credit card debt is the number one obstacle to becoming financially sound. It is very easy to succumb to impulses when one has the little piece of plastic called a credit card. It makes sense to err on the side of caution while using credit cards. Credit cards have made borrowing easier. Be careful not to  buy things you do not need with money you do not have when using credit cards. You will be caught in vicious repayment debt cycles.
 
Use financial planning software:
Financial planning software complements personal financial planning. It is of help to both the financial planner and the client. Nowadays, personal tax laws are frequently amended, new policies that affect personal finances are periodically announced, and new financial products are regularly introduced. New short-term and long-term investment opportunities keep cropping up. In such a fluid scenario, recasting your financial planning regularly can prove daunting. However, the financial planning software makes this entire process almost effortless, swift, and accurate. It is worthwhile to invest in good financial planning software.

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