What is Financial Planning?

October is National Financial Planning Month, so the average consumer can expect to be bombarded with a wide array of information throughout. All of that information can be overwhelming, as well as confusing; we believe that one should understand what financial planning IS before one understands what financial planning DOES.

What exactly is financial planning?

Financial planning is the allocation of resources. That’s it. It’s not retirement planning, insurance and/or investments, tax planning, and certainly not a document that you review with a person in a suit once a year. It is simply the allocation of resources. In other words, it is about knowing how to allocate your resources among the many components of your financial life.

This means that, done properly, every component of your financial plan should be working together as a cohesive unit. The purpose of that unit is to propel you forward toward your goals.

Today’s financial industry essentially teaches us that money is a carrot on a stick. Put your dollars away in retirement accounts and magically at some point in the future we can live happily ever after.

Money should not be a carrot on a stick that we chase our entire lives, but a catalyst that allows us to build the life that we want now. It should help us make decisions that will lead us to live the life that we desire, rather than leading a life that’s waiting around for retirement. Far too many people are living the “waiting on retirement” scenario.

We want to change this. Financial planning can change that, but only if we redefine our definition of it and start to truly understand that our money needs to work for us, rather than us working so one day we will have money.

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