Introduction to Personal Financial Planning

So in the brief overview of what financial planning is, personal financial planning is a process that has several major subjects within the financial spectrum and has a particular program when a financial plan is created for a client.

The financial planning process involves:

  • Establishing and defining the client-planner relationship
  • Gathering client data including goals
  • Analyzing and evaluating the client’s current financial status
  • Developing and presenting recommendations and/or alternatives
  • Implementing the recommendations
  • Monitoring the recommendations

The financial planning subject areas are:

  • Financial statement preparation and analysis
  • Insurance planning and risk management
  • Employee benefits planning
  • Investment planning
  • Income tax planning
  • Retirement planning
  • Estate planning

I. Introduction to Personal Financial Planning

Financial planning is the process of determining whether and how an individual can meet life goals through the proper management of financial resources. Financial planning integrates the financial planning process with financial planning subject areas.

How Personal Financial Planning Can Benefit You

Ok. Financial planning seems like an obvious task for everyone to do, but how many people do you know like to have a budget to stick by every month, balance their investments every half year, and make sure to take advantage of all available tax deductions every year? Unfortunately not many people enjoy doing these things.

However, doing financial planning can achieve more wealth for yourself, protect your family from any financial disasters, and give a peace of mind that everything will be alright financially.

The Two Parts to Effective Financial Planning


Offense in financial planning means you are taking action in making a more secure financial future for you and your family. You can take action in different ways. One way is by investing your money in the stock market in hopes of a high return on your investments. The other way is putting your money in a savings account where your money is more stable than the stock market and grows with a little bit of interest. Either case is a type of offense.


Defense consists of you defending your finances from disasters. Say a tornado came and destroyed all your belongings. Would you have insurance to cover all the damages? Insurance is the defense for your financial plan. Without it, you are exposed to risks which may put you in a terrible position if not adequately prepared.

A financial advisor or planner should be able to design a plan with both offense and defense for your financial well-being. I would be suspicious if your planner was only promoting one method without mentioning the other.

Why Hire a Financial Planner or Advisor

Financial professionals have spent years studying and preparing to serve you with their knowledge and expertise on the offense and defense to a financial plan. Making the wrong move can be expensive. That is why hiring a professional planner or advisor is similar to hiring a plumber, contractor, mechanic, etc. You may be able to do the work yourself, but it may cost you more in expenses, labor, and time.

…because they are suppose to help you increase your net worth!

So why work with a financial planner or advisor? Simply because these professionals are suppose to help you increase your net worth! Sure you may have to pay for these services, but their services should produce results that overshadow their cost (market permitting). You may have a chance at saving more money if you do not work with a planner or advisor, but there is a lot of work behind protecting your assets effectively, building your assets effectively, and distributing your assets effectively.

The Relativity of Financial Success

Success is totally relative on the person. It is important for any financial professional to acknowledge in some way what your definitions of financial success are. Ethically, your financial professional should weigh what your goals and objectives are into the advice they are giving.

For example, if your advisor recommends products that tie up your assets for several years, but you intend on using those assets in a shorter period; this would be a problem. Your advisor must understand your beliefs on what you wish to achieve financially.

II. The Internal and External Environment

Follow the link above to learn more about the Internal and External Environment of financial planning.

III. Internal Environmental Analysis

Follow the link above to learn more about the Internal Environmental Analysis.

IV. Basic Planning Tools

Follow the link above to learn more about the Basic Planning Tools.

V. The Financial Planning Profession

The Practice of Financial Planning

Follow the link above to learn more about the financial planning profession and practice.

Ethical Responsibilities

Follow the link above to learn more about the ethical responsibilities of financial planners.

VI. Learn More About Financial Planning

Insurance Planning

Follow the link above to learn more about the insurance planning process.

Introduction to Investment Concepts

Follow the link above to learn more about planning for personal investing.

Individual Income Tax and Tax Planning

Follow the link above for the Tax Planning section of the wiki

Introduction to Retirement Planning

Follow the link above for the Retirement Planning section of the wiki

Introduction to Estate Planning

Follow the link above for the Estate Planning section of the wiki

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