A financial plan: why would you choose this and what exactly does it mean?
Only a few people are busy drawing up a financial plan. That is actually not very wise, because it can be very useful to have all your financial affairs in order. This way you have a good overview of your finances. What do you still want to achieve in your life, and what have you already achieved? Financial planning provides openness and clarity: you know what actions you need to take to achieve your goals.
If you want to be financially independent later on, a financial plan is essential!
What exactly does a financial plan entail?
A financial plan provides a good overview of your financial affairs. The present is considered, but the future is also included. The future cannot be predicted, of course, but a financial planner still tries to include it in order to sketch a complete financial picture. Your further life course is carefully examined. It starts with registering your current income and assets. Then it will be calculated whether your assets will increase in the future, and by what percentage. The following matters are included in a financial plan:
- Taxes
- Loans or mortgages
- Insurance and possible pensions
- Subsidies
- Shares and savings accounts
- Risks
These things together form your financial overview. Based on this overview, you can estimate which actions you need to take in the future to improve your financial situation. Your objectives are closely monitored. For example, do you want to retire early, or would you like to help your children with their studies? This can all be included in your plan and you know what you need to do to achieve this. Absolute certainty!
What are the duties of a financial planner?
Some people have experience with financial advisors, because they have helped you take out a mortgage, for example. However, financial advisors and financial planners differ considerably from each other. A financial advisor assists you in one specific area, and has expertise in this area. A financial planner has broader knowledge and can help you with various matters, and not just matters in a specific area. In addition, a financial advisor can sometimes receive commission when selling certain financial objects, which is not the case with a planner.
A financial planner takes your entire life into account. The planner provides a clear overview and also takes the future into account. He takes your wishes and goals into account. It becomes clear to you which activities you need to undertake to achieve your wishes. You need explicit and clear financial advice and a financial planner can provide you with this. Together with your planner, you put a plan on paper that you both agree on. You are presented with multiple future situations, so that risks are calculated and you are not faced with surprises.
Of course, a financial planner is not free. The complexity of your questions will influence the costs you spend on drawing up a financial plan, as well as your financial situation. But, a financial plan is worth its weight in gold. And after drawing up the financial plan, your financial planner will continue to keep you informed of developments regarding your assets. This way, your goal remains within reach.
In short: what are the tasks of a financial planner?
- Provide you with insight into your finances and discuss with you the best way to achieve your goals
- Putting a financial plan on paper
- Providing advice regarding your finances
- Keeping you informed about your financial developments
Who can use a financial planner?
A certified financial planner assists both self-employed persons and individuals. For self-employed persons, it is nice to have a financial plan in addition to the documents from an accountant. The financial planner takes into account your entire financial situation and looks for a way in which you can achieve your goals. You do not have to worry about this, the financial planner focuses on the finances.
A private person can have very different reasons to hire a financial planner. If you suddenly get divorced, if your children have left home or if you would like to move: these can all be reasons to ask a financial planner for help. Together you put your goals on paper and the way in which you can achieve them.
What are the benefits of such a financial plan? Individuals who have worked with a financial planner indicated that they have more peace and clarity about their financial situation. This is very pleasant for many people.
Are financial planners objective?
There are many financial planners and advisors. Most people give advice regarding loans and mortgages. Only a small part has knowledge of financial matters and can draw up a good financial plan. It is wise to look critically at the way in which the advice is given. Therefore, ask yourself the following questions:
- How does the revenue model work?
- Is there open cards being played?
- Can the financial planner benefit from selling a specific financial product ?
- Does the financial planner keep all options open?
Some financial planners sometimes benefit from selling a certain financial product. That is why you should always remain critical: it is possible that the advisor receives commission or recommends his own products. The planner does not look closely at your personal financial situation and can therefore make incorrect recommendations. You should therefore realize that some financial planners have other interests.
There are also objective financial planners. They will play completely open cards and you can be sure that you will be presented with the best deals. You can pay these financial planners per hour or simply give a fixed rate for what they deliver to you. This form of payment is independent.
Financial planner is not for certain individuals. If you would like to approach a financial planner, it is wise to choose a recognized planner with a quality mark. That way you are sure of your business. Better safe than sorry!
What are the characteristics of a financial plan?
Good financial planning starts with identification. This gives you a complete picture of your assets. This is followed by an investigation of all your income and other ways in which you have built up assets. And, what expenses do you make? And, what risks do you run? Finally, you will receive personal advice, specially tailored, on how you can improve your financial position.
Identification:
- Income
- Life course
- Home
- Future and pension
Research:
- Development of your assets
- Possible risks
Advice:
- Information about your goals
- Advice to take as little risk as possible
What if you want to put together a financial plan yourself?
You can also write down a financial plan yourself, you don’t necessarily need a financial planner for this. You can start by listing all your income and expenses. Then you can analyze your own financial position: are there areas in which you can still save money? You have to invest enough time in this, otherwise it doesn’t make much sense. You have to look at your own financial situation with a broad view. In this way you can influence what your future and pension will look like. You can easily include changes in your plan yourself, which is handy. Do you invest or do you want to invest ? Then this should also be reflected in your financial plan!
If you want to make your own financial plan, you can use various tools on the internet.
Do you prefer a financial plan or a life plan?
Financial planning is not just about numbers, it is also about your own goals. What do you still want to achieve in your life? What actions do you still need to take to achieve these goals? This is life planning, devised by George Kinder. First, you need to write down what you want to achieve in your life. Once you have this in order, you can start with your finances.
Life is of course quite unexpected. A financial life planning brings structure to your life, since it states what you still want to achieve in your life and what you need for this. In this way, with a life planning, you can still put together a financial plan that is fully aligned with your life goals. Financial independence is a logical next step and very pleasant: this way you can devote your attention to things you really care about!
George Kinder:
“Financial plans are not related to money. Life has priority.”