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Definition of financial planning

planning

Planning in general is preparing a plan for businesses and projects in the future by developing a well-studied plan, whether economically, educationally, or other, and drawing a curriculum for it. Financial planning is similar to planning in most of its aspects, but it is related to financial matters and the management of these funds. It is also expected what the future should look like. Planning The most important techniques of project and time management are by preparing work steps to achieve some specific goals, which are similar to a map. Economically, it is a basic function of management, in which a detailed plan is formulated to achieve the optimal balance between needs or requirements with available resources. The planning process defines the goals, strategies, and means required to implement all steps. In their proper sequence, these goals are achieved.

financial planning

Financial planning is a continuous process of planning that aims to help make reasonable decisions about money that pertain to goals in life, meaning that it is estimating the required capital, determining competition, and setting financial policies related to procurement, investment and money management, and it is a necessary process to achieve success and future stability financially, as human plans He envisions his future as he wants, as he also seeks to consolidate financial constants. The future holds unseen matters, including high prices, increased obligations and emergency matters. Financial planning must put emergency matters and continuous life change into account when carrying out the planning process to secure a better and financially stable life.
Definition of financial planning
Definition of financial planning

Elements of a financial plan

Financial plans do not have a specific template. A good financial plan can alert the investor to changes that must be made to ensure a good financial future, such as spending cuts or changing asset allocation. Financial plans must also be flexible and updateable when financial changes occur. The financial plan has elements that must be To contain most of them to be successful and flexible, and the elements are as follows:
  • Financial goals.
  • Personal net worth statement.
  • cash flow analysis.
  • retirement strategy.
  • Comprehensive risk management plan.
  • Long term investment plan.
  • tax reduction strategy.
  • Real estate plan.

Types of financial planning

There are different types of financial planning strategies. Planning is a difficult and not easy task and requires discipline. It is one of the basic roles of management and a successful life. It includes a plan to achieve goals, assess financial needs, calculate risk, investment plans, and tax plans, as well as personal financial planning, retirement and old age account. There are different and varied types of plans. Finance:
  • Personal net worth statement: Statement of assets and liabilities and make them a benchmark for measuring progress toward financial goals.
  • Cash flow planning: where an individual or company expects short-term and long-term expenses against the expected cash flow, cash flow must be appropriately planned because incorrect cash flow planning can lead to bankruptcy.
  • Investment planning: The investment plan depends on savings.
  • Insurance Planning: Long-term insurance coverage is a very crucial type of financial planning and depends on the individual's lifestyle and must be analyzed first before purchasing any insurance to avoid unforeseen circumstances.
  • Retirement strategy: It is what happens in everyone's life, and it is one of the most important types of financial planning, which is setting financial goals for retirement income due to high inflation and a high standard of living and to start saving and investing early for retirement.
  • Tax Planning: Sound tax planning aims to achieve the maximum amount of financing.
  • Real estate planning: Asset creation is an important type of financial planning and can create wealth or can make for a good retirement plan as real estate is a low-risk, high-return investment.
  • Long-term investment plan: an investment plan concerned with allocating assets for specific investment objectives for a long time in the future.

Financial planning specialists

Due to the importance of financial planning and because it is a specialty that everyone needs, either companies or even ordinary people, some companies and specializations that specialize in financial planning have arisen, and these disciplines are either an individual profession independently, such as the profession of a doctor or a lawyer, or they are an independent entity to provide financial planning services such as companies, including :
  • Financial planner: The financial planner, whether independent or a specialized company, prepares a program to help the client achieve long-term financial goals through analysis of the client's situation. He is a qualified investment professional who helps individuals and companies achieve their goals. Financial planners often specialize in planning risk management, tax, asset allocation, and retirement. .
  • Personal Financial Advisor: A personal financial advisor is a dedicated professional who advises on a range of issues such as investments, insurance, college savings, and more.
  • Approved Financial Planner: An approved financial planner is a scheme that holds a certificate granted by the Accredited Financial Standards Board, and has an ethical requirement that it must comply with the Board's standards of professional conduct.
  • Retirement Planner: A retirement planner is a practicing professional who specializes in preparing a retirement plan. A retirement planner identifies sources of income, estimates expenses, implements savings programs, and helps manage assets to achieve a successful retirement plan.
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