| What is Financial Planning? |
For most people, the ultimate pursuit in life is to achieve freedom. Freedom from want. Freedom to choose. Freedom to pursue higher goals in life.
For this to happen, financial freedom is essential. Without it, a person would simply be locked into survival mode. And financial freedom can only be achieved through some form of financial planning.
Financial planning for an individual is the process by which one:
 | Assesses a financial status (assets, liabilities, earning capacity and spending habits) | ||
| Sets financial objectives | ||
| Determines a plan to achieve those objectives | ||
| Executes the plan, and | ||
| Monitors and adjusts the plan according to changed circumstances |
In short, financial planning is about anticipating and managing one's financial status in the future - anticipating desired financial outcomes, working towards achieving these and avoiding others.
Many think this is ‘for the rich only'. Actually, financial planning is not about financial status but about figuring out how to use one's resources to optimise financial results.
Financial planning for life is planning for the very long term.
Plan early. The longer this is left off, the more difficult it will be to meet major goals, such as providing university education for children and living comfortably after retirement, which are required to be built up over a long period of time.
Otherwise, one may have few or no options left when confronted with a major financial commitment that, over the years, has increased by inflation beyond the resources available. In such event, the person may have no choice but to lower his/her living quality, seriously curb spending and become a burden, dependent on family members or friends. |  |
