Personal Financial Planning

Stuck on Success

How do you define personal success? I ask this question a lot, and interestingly, the answer frequently incorporates the concept of financial freedom. When I dig a bit deeper, financial freedom translates into a wide variety of dreams.

Why is financial freedom so attractive? Perhaps it is because so many people limit their ability to turn dreams into reality because of their financial situation.

We all know people in jobs that no longer bring pleasure, but they stay because of their need to maintain a certain income level. How many business owners are treading water in stagnant markets because they are afraid to take steps to change the business until profits reach a certain level? If only they were financially free Financial coach

At what point is it OK to take a risk? How much is enough? Do what you love and the money will follow, is that wise advice? While the reasons that people avoid change are multifaceted, finances are often cited as the reason, so let’s explore the issue.

Strategic Financial Planning

If your financial situation is preventing you from moving forward, what would you do if you were in better financial shape? Assuming you can answer that question with a few clearly defined goals (and if you can’t that comes first), financial planning can help you take steps toward addressing fears and demystifying the unknown by systematically identifying the risks, and evaluating the alternatives.

Let’s take a look at each of the steps in a financial planning process:

Setting goals

Collecting all relevant data

Identifying barriers to achieving goals

Setting a timeframe within which to achieve goals

Developing methods and procedures to help achieve those goals

Periodically re-examining goals and modifying them as conditions change

Setting Goals

Although many people address financial issues as they arise such as a child entering college, a family member dies, or it is time to sell the business, financial planning requires you to anticipate the future by setting goals. Without goals you can’t get very far in the financial planning process, and without a financial plan you may be limited in achieving your goals.

Collecting Relevant Data

Comprehensive financial planning requires that a number of critical areas are evaluated at the same time. Looking at any area in isolation will only tell a partial story, and the best alternatives to any one issue are often missed. The standard areas are tax planning, investment management, cash management, budgeting, retirement planning, estate planning, and insurance. The analysis is adjusted according to specific needs and might also include education funding, charitable giving, and trust management. The picture that forms by looking at all of the pieces together is the starting point to creating optimal financial strategies and to making realistic, well-educated decisions.

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