Smart.Happy.Money 1: What is financial planning?

What is Financial Planning?

When people think of financial planning they think about investment management. Where should I invest my money? Who will invest it for me?

While this plays a part of a financial plan, and any good financial advisor will recommend that you invest your money a certain way, it is only a small part of a full and holistic financial plan.

A financial advisor can help you to define your goals. Your financial goals such as being covered by appropriate levels of insurance, saving for retirement or starting an investment account but also your lifestyle goals.

This may sound strange but most people don’t actually want dollars in the bank. When asked they may say ‘I want $1,000,000 in savings’ but that’s not what they are really looking for. They want whatever they think a $1,000,000 bank account gives them. Is it freedom of time?freedom from work? travel? etc. This is the actual goal.

Let’s imagine I offered you $50,000,000 but it had to sit in your account and you could never use or touch it. Or I offered you $100,000 per year that you could access. Which would you choose?

Money is the means not the goal.

A good financial advisor will help you to determine your lifestyle goals. This may involve you doing a little work as well, but that’s ok, the more you put in the more you will get out. The very important and very boring part of this is determining your current spending habits. Figuring out where your money is going now. This can be a hard task, given that most people have no idea. You may also find that it is upsetting when you realise how much of your hard-earned cash is wasted away.

However, by gaining an understanding of your current spending habits you will be able to shift them to a more positive outcome. This is the base of your future financial plan.

Financial Planning is helping you to achieve this, helping you to be in a better financial and lifestyle position than you were before. It’s like hiring a coach to get you to perform at your best. Someone to assist yo to grow, help when things go bad and tell the truth in tricky situations.

I believe that financial planning is for everyone, after all, we all have to deal with money on some scale and we can always improve.

From the simple to the complex, we hope you will undertake a financial plan to improve your financial position.

Have a great day.

Ben Graham-Nellor

Ben Graham-Nellor is an advisor, coach, blogger and speaker who has worked in the financial services industry for over 15 years.

BGN Financial Management Pty Ltd is a Corporate Authorised Representative 468796 of Professional Investment Services Pty Ltd AFSL 234951 ABN 11 074 608 558

The information in this communication has been prepared on a general advice basis only. The advice has been prepared without taking account of your specific objectives, financial situation or needs. Accordingly, you should, before acting on the advice, consider the appropriateness of the advice having regard to your objectives, financial situation and needs. In cases where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a Product Disclosure Statement (or other relevant information statement) and consider such document before you make any decision about whether or not to acquire the product. For these reasons, it is imperative that you seek advice from your financial adviser before making any investment decisions.

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