What Is Personal Financial Planning?

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Personal financial planning typically involves creating a personal budget, planning for taxes, setting up a savings account and developing a debt management or recovery plan. All of these activities may be assumed by a certified financial planner who is hired to assist an individual with their finances, but individuals can also establish their financial plan to reach short and long-term savings and investment goals.

Significance

Creating a budget, allocating financial resources for savings and investments, or even setting up a savings account are all components of personal financial planning. Individuals who have a background in accounting or finance may be able to initiate these projects and tasks on their own, but those who do not have experience or knowledge in this area may consult with a certified financial planner for advice and guidance. Financial planners are responsible for organizing the individual's finances, analyzing their credit and assets, and making recommendations on different savings and investment accounts.

Function

Personal financial planners are hired to assist individuals in organizing their financial accounts, developing an investment strategy and reviewing assets and liabilities to create a personal financial statement. Financial planners can also provide advice and guidance for estate planning, drafting a will, and setting up new checking and savings accounts for an individual and their families. They may also help with finding and selecting insurance premiums; creating a debt management plan; or provide assistance in financial planning for significant life changes such as marriage, divorce or going to college.

Benefits

Individuals who want to have more control over their finances can create a realistic budget, obtain a credit assessment and develop a financial forecast for their future using several financial planning strategies. Personal financial planning services from a certified professional can help to begin this complex process. A well-planned financial forecast and working budget can help an individual make sound spending and saving decisions and secure a strong financial future for themselves and their family.

Features

A certified financial planner is authorized to provide guidance regarding different types of financial accounts and developing sound investment strategies. They can help with filing an income tax return; developing a strategy for improving the individual's credit score; assessing an investment portfolio and providing recommendations for building the portfolio; calculating a monthly budget; setting up a retirement fund; setting up a tax payment fund or other savings accounts.

Warning

While a personal financial planner can help individuals create a solid financial strategy and analyze their accounts and credit standing, they cannot guarantee that their investment advice will be 100 percent accurate. It is still up to the individual to review their investment options and allocate their financial resources using their best judgment. Personal financial planners are a resource for those who want to learn how to create a budget, plan for retirement or take control of their debts.

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