8 Aspects of Financial Planning

Last week we shared a video concerning the 8 aspects of financial planning. We had some good feedback but some of our viewers felt we should expand a bit on the ideas behind the video. A picture may paint a thousand words, but its best the right words to be painted.

At Your Financial Strategists, financial planning encompasses these 8 areas.

The first area is money management. This involves identifying our expenses, and optimizing our financial resources. We need to know what we are spending our money on and set aside our money for our future needs. By optimising our money across now and tomorrow, we achieve a balanced life, neither YOLO nor Living in the future, but alive all the time.

The second area is risk management. A critical tool used is insurance. Insurance planning is important in reducing our downside risk. How much is the optimal amount of insurance to buy? What insurances do we need? The advisor’s role here is to provide a check on your blindsides to ensure appropriate cover. We have a range of articles, covering topics like Putting the E in CI, Disability Class of Insurance, Differences in Disability Insurances, so keep watching this space!

The third domain attracts a lot of attention. Investment, to ensure our money can grow, is an integral part of financial planning. But it is different from speculation. Investment requires a plan. It involves setting a clear and defined goal, an assessment of a person’s risk appetite and the design of a strategy. The strategy includes, among other areas, investing, balancing and divesting.

The fourth area is an important area for our world today. Education planning is not limited to our children’s education; education planning includes our own training. The upgrading of our skills. How many of us have a budget for books? Courses? Too old for a degree you say? The oldest person conferred a degree was 99 years old. Plan for upgrading. As you invest your money, invest also in yourself.

The fifth area is the single largest purchase for most of us. The purchase of our home. It is expensive. It usually involves a loan. It has a long term repayment. Because of the unique and infrequent experience of buying a house, care needs to be taken to calculate long term affordability. Don’t let the dream house become a nightmare.

Death and taxes are two inescapable truths. While we can’t escape them, we can look at how to live our lives fully. Tax evasion is illegal; what we want to do is claim all the reliefs we are entitled to. Afterall, we shop around for a good deal; should we do the same with our taxes? This concludes the 6th area.

The 7th area is something everyone wants. Retirement is when we enjoy our years of work. Retirement is when work is a choice; we work because we want to and not because we have to. Retirement is when we can spoil our grandchildren, because we nurtured our children well. To do that, we need a plan to carry out the vision we have for our retirement. One inescapable area is to create sources of passive incomes to fund our retirement.

And right up to the end, we have our legacy. Death is a reality we all face, the last great adventure. All of us will die. All of us will leave a legacy. It could be a short one. It might be a bad one. But we will leave a legacy. Strive to leave a good legacy. This involves ensuring our assets are distributed to the right person. This might include leaving money for your unborn descendants generations away. In one instance, a person died in 1925, but had willed that his assets would be distributed much later. The assets were distributed only in 1996, 71 years after his death. His legacy transcends generations.

8 areas of planning 8 areas of dynamic planning to ensure that your financial health is taken care of. 8 areas that require planning, updating and reviews. What areas have you completed?

#financialplanning #riskmanagement #investment #educationplanning #estateplanning #taxplanning #retirementplanning #legacy