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What is Financial Planning?
Financial planning is the process of taking an overall look at your economic situation in order to try to build a specific plan to reach your objectives. Such a plan has to be created by considering and assessing different financial areas, from taxes to investments, retirement, insurance and so on. This may be helpful for individuals, families, companies, and more, as it helps create and identify long-term needs and goals. For instance, if your goal is to try to secure a more stable economic future for you and your family, you can start planning your retirement years.
However, if you’re not sure where to start and you’re struggling to figure out how to create a plan for your future, you should know that you can rely on the help of financial advisors. Thanks to their experience and skills, financial counsellors can guide you in your path by helping you plan a solid strategy for your purposes.
Moreover, financial consulting has been developing throughout the years and today it is also possible to rely on robo-advisors, algorithm-driven digital consultants designed to provide financial tips and advice according to your situation, and even automatically invest your capital depending on your preferences.
On the other hand, there are also other useful tools whose aim is to help you in evaluating your economic situation, such as ISAs calculators. They are calculators specifically intended for who owns an Individual Savings Account, as they can make a forecast of the future value of the account. If you want to find out more about the features of these calculators, you can read this blog post on Moneyfarm’s website.
In what areas is financial planning useful?
Financial planning can be very useful in many different situations. Let’s have a look at some of the areas to apply your strategy.
Plan your retirement years
Probably, one the most important parts of the creation of a solid financial plan is the maximization of the sum you can put aside for your future and your family’s. This is indeed something that will have a huge impact on your future life and its quality. In this case, your strategy will involve a good balance between the kind of life you wish to have for your retirement years and the capital at your disposal.
Why is it so important to create a plan then? Creating a strategy for your future means identifying your future needs and acting accordingly. For instance, you should ask yourself where you want to live in the future, if you want to continue living in the same house or move abroad or if your children will need your financial support. By answering these important questions, you will have the opportunity to map your future and create a plan to achieve the goals you have set for yourself and for your family.
Create a plan for your tax situation
Since you will have to pay taxes according to your economic situation, it is important to create a solid plan in this area as well so that you can maximize the expenses and savings at your disposal. For instance, if you own an Individual Savings Account, you could try to make the most out of your tax-free annual isa allowance. The same goes for your state pension annual allowance. Also, make sure to claim all the tax credits you are eligible to get.
Plan your insurance
Guaranteeing you have appropriate coverage to guard yourself for a range of eventualities is really important as well. Today you can choose between many different types of insurance, such as life insurance, car insurance, private medical insurance, property insurance, and more.
Life insurance is so important and that has been designed to provide you with full protection for you and your family. Property insurance is crucial as well, for it helps you protect all the assets included in your financial portfolio. Car insurance, on the other hand, is meant to avoid expensive maintenance in case of a breakdown or accident. Thus, you have also to assess the expenses related to insurance when creating your financial plan.
If all of this seems tedious or you just don’t have the time to plan everything, you can always get the assistance of an investment firm which has financial planners to give you an overview of your financial situation and help you plan your approach better.