Sound financial planning is the best way to help you determine your financial goals and create an individual plan to meet those goals. Cathy Smith, independent financial advisor with Jones & Co, outlines 10 reasons why financial planning is so important and how getting expert advice will get you just where you want to be!
1) Income: it’s possible to better manage your monthly income through planning. Managing your income will enable you to fully understand your monthly expenditure by ensuring you know exactly how much you spend on essentials, household bills, savings and paying off debts.
2) Cash flow: you can increase your cash flow by monitoring your spending patterns and expenses. Tax planning, prudent spending and careful balancing will help you to make more of your hard-earned cash.
3) Capital: an increase in cash flow can lead to an increase in capital which, in turn, can allow you to consider investments and improving your overall financial health and wellbeing.
4) Family security: providing for your family’s financial security is a key part of the financial planning process. Having appropriate insurance cover and policies in place will provide peace of mind for you and your loved ones.
5) Investment: a proper financial plan considers your personal circumstances, objectives and risk profile. It acts as a guide in helping to choose the right type of investments to meet your goals and objectives.
6) Standard of living: savings generated from good planning can prove beneficial in difficult times. For example, making sure there’s enough insurance cover to replace any lost income should you or a member of your family become unwell, unable to work or die.
7) Financial understanding: better financial understanding can be achieved when measurable financial goals are set, the effects of decisions understood and results reviewed. This gives you a whole new approach to your budget and improves control of your financial lifestyle.
8) Assets:a nice cushion in the form of assets is desirable. Many assets come with liabilities attached so it’s vital to determine the real value of the asset. By settling or cancelling liabilities and debts comes an understanding of your finances and enables you to build assets that aren’t a burden.
9) Savings: rainy day savings are important as sudden financial changes can really throw you off track. It’s good to have some investments with high liquidity such as cash savings. These savings can then be used in times of emergency.
10) Ongoing advice: establishing a relationship with an independent financial advisor you can trust is critical to achieving your goals. Your independent financial advisor will meet with you to assess your current financial circumstances and develop a comprehensive plan tailor-made for you.