A step-by-step approach for achieving one’s monetary goals in life is termed financial planning. Financial planning is a guide on your journey in terms of economic benefits. Your emotional and financial well-being are inextricably linked. Building a solid financial plan allows you to have proper management over your income, investments, and expenses as well as peace of mind.
We are all ultimately working hard to have financial stability. If you want to protect your finances against uncertainty, financial planning is the key to achieving it.
What is the Difference Between a Financial Advisor and a Financial Planner?
A financial advisor is a professional who helps clients with a wide range of financial services. A financial planner only works within that area of expertise and helps clients make a comprehensive financial plan without specializing in any one specific area.
Financial planners help their clients with matters such as:
- Analyzing budgets and spending habits to find areas where expenses can be trimmed.
- Create short-term and long-term savings strategies.
- Review retirement goals and help to build a savings plan.
- Advise on how best to save and pay for college expenses.
Objectives of Financial Planning
There are key objectives for financial planning that will help you to be successful. They include:
Determining Capital Requirements
Determining the capital requirement depends upon various factors such as costs of current and fixed assets, promotional expenses, and long-range planning. Both long-term and short-term requirements should be considered while determining the capital requirements.
Determining Capital Structure
Once the capital requirement is determined, then we determine the capital structure. Capital structure is the composition of capital that is the proportion and relative kind of capital required in a business. This includes both short-term and long-term debt-equity ratios.
Financial Policies
The next objective is framing the financial policies with regards to cash control, borrowings, lending, etc.
Utilization of Financial Resources
Once the financial policies are set, then comes the role of ensuring the maximum utilization of financial resources available to get the maximum return on investment.
Importance Of Having a Financial Plan
The objectives of financial planning frame the objectives, policies, procedures, programs, and budgets for all financial activities. This ensures adequate and effective financial and investment policies.
Here are additional benefits of proper financial planning.
- Ensures availability of adequate funds when needed.
- Ensures a proper balance between the inflow and outflow of funds so that financial stability is maintained.
- Ensures that the sources from which you are accessing funds also exercise financial planning.
- Proper planning of finances leads to expansion and growth programs that help in one’s long-term survival.
- Uncertainties are gone with financial planning no matter, what sort of trends are up in the market.
- Ensures stability and removes the difficulties that may deter the growth of wealth.
If you are or who knows someone who is stuck in a financial crisis and is looking for support, get in touch with M&A Wealth Management today and one of our financial advisors in Houston will assist you!
FAQs
A financial advisor helps you monitor and reassess the investment performance because you may not have the time to do it. Regular monitoring of your investment portfolio ensures alignment of your investments with your financial goals.
Make sure you thoroughly vet the company you want to hire. Make sure their business offerings align with your needs.
When you need help to prioritize your financial goals or need help with investment management, you may want to work with a financial advisor. Financial advisors bring an expert and outside view to your finances, taking a holistic look at your financial situation and suggest improvements.