When you decide to undertake financial planning, it's important to understand what it can do for you—and what it can't do. Many people consult with a financial planner as they face major life events that have a financial impact: getting married, having children, college expenses, or nearing retirement. Planning is important for these events, but it can help at any time in your life, as long as you realize what you'll get out of it.
What Financial Planning Can Do
Financial planning can help you to set goals for the things that are most important to you, and show you what you need to do to reach them. A good financial planner will look at all the areas of your life and help you to prioritize what is most important to you.
If it is critical to you that you pay for your children's college, and then leave them a large legacy, a financial planner will show you what you need to do in order to be able to do that. If your concern is a cushy retirement, a planner can show you how to achieve that.
Financial planning can give you peace of mind. It's difficult for many people, with all the day-to-day responsibilities that they have, to think about how much they need to save now in order to enjoy a comfortable retirement thirty years from now.
Planning can also show you the impact certain life events may have, such as the early death of a spouse, or the need for long-term care. Knowing that you are saving what you need to in order to reach your goals can be a great stress-reliever.
A good financial planner can take some of the emotion out of planning for the future. In the case of a married couple, a planner may be able to help them verbalize their goals and compromise on ways to meet them.
What Financial Planning Can't Do
Financial planning cannot change the numbers. Even the best financial planner in the world cannot provide a comfortable, 30-year retirement for someone who hasn't saved during their working life. Many people think they will be able to spend seven, eight or even ten percent of their retirement savings each year throughout their retirement, but the numbers simply don't bear that out.
It also can't predict the future. A good financial plan will account for many different scenarios, but it can't tell you when the stock market is going to crash or whether your spouse will need long term care. It can help you to adjust your plan if these things happen, however.
Understanding the benefits and limitations of financial planning will help you and your planner to come up with a realistic blueprint for your financial life. Use resources such as http://globalwealthconsultants.com to connect with financial planners in your area.Share