Financial Planning: Process and Rules - Purpose, Benefits and Components

PURPOSE
The purpose of financial planning is to help individuals and families achieve their life goals through proper management of their finances. This process allows them to see where they stand financially and determine what steps they must take to reach their objectives.

BENEFITS
Financial planning provides direction to financial decisions and gives insight on how each decision affects other financial areas of life. Viewing each financial decision as a whole allows one to consider its effects on short- and long-term goals.

COMPONENTS
The components of financial planning include, but are not limited to, the following subject fields:
  1. Financial statement preparation and analysis
  2. Investment planning
  3. Income tax planning
  4. Education planning
  5. Insurance planning and risk management
  6. Retirement planning
  7. Estate planning
Steps in the Financial Planning Process


Related Articles
  1. Professionals

    Stock Plans

    Stock Plans
  2. Savings

    What Kind Of Financial Plan Makes Sense For You?

    Comprehensive financial plans can help people maximize their financial potential and make smart decisions. But how complex a plan do you really need?
  3. Investing Basics

    3 Questions To Find Your Trading Plan

    Ask yourself these three questions to figure out which strategy is best for you.
  4. Retirement

    How Does a Pension Plan Work?

    A pension plan is a savings plan maintained by an employer on behalf of its employees for their retirement.
  5. Investing

    Advising FAs: Explaining Estate Planning to a Client

    As the old saying goes, you can't take it with you. For this reason, it is important to have a current estate plan in place to protect your family and belongings.
  6. Retirement

    4 Ways Financial Plans Get Derailed

    A financial plan is useless if it never gets put into use. Here are four things to avoid when creating one with a client.
  7. Wealth Management

    Why Own Life Insurance in a Qualified Retirement Plan?

    What are the pros and cons of owning cash value life insurance in a qualified retirement plan?
  8. Professionals

    Nonqualified Retirement Plans

    NASAA Series 65: Section 14 Nonqualified Retirement Plans. In this section 457 plan and sample questions.
  9. Professionals

    Financial Planning: Process and Rules

    Financial Planning: Process and Rules
  10. Taxes

    401(k) And Qualified Plans: Introduction

    By Denise ApplebyDuring retirement years, income for retirees usually comes from three primary sources: Social Security benefits The regular savings account of the retiree Retirement-plan ...
RELATED TERMS
  1. Tax Planning

    Logical analysis of a financial situation or plan from a tax ...
  2. 529 Plan

    529 is a category of plans that provide tax advantages when saving ...
  3. Variable Benefit Plan

    A type of retirement plan in which the payout changes depending ...
  4. Qualified Retirement Plan

    A plan that meets requirements of the Internal Revenue Code and ...
  5. Active Participant Status

    Active-participant status is a reference to an individual's participation ...
  6. Financial Plan

    A comprehensive evaluation of an investor's current and future ...
RELATED FAQS
  1. Why are the tangible assets of a company important to investors?

    Learn what the significant difference is between a financial forecast and a financial plan, for either individuals or for ... Read Answer >>
  2. What is the difference between portfolio management and financial planning?

    Understand the difference between financial planning and portfolio management, and learn which financial professionals can ... Read Answer >>
  3. Are 457 plan withdrawals taxable?

    Learn how withdrawals from 457 deferred compensation plans are taxable but are not subject to the same rules and restrictions ... Read Answer >>
  4. What is the difference between a 401(k) plan and a 457 plan?

    Discover how 401(k) plans are privately offered employee retirement plans, while 457 plans are typically available to public ... Read Answer >>
  5. How do you plan for retirement if you have multiple employers? Can you combine retirement ...

    Retirement planning for those who work for more than one employer is essentially the same as for those who work for only ... Read Answer >>
  6. What are my main rights as a 401(k) plan participant?

    Learn how under ERISA, 401(k) plan participants are guaranteed several important rights, including protections of their plan ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center