FINANCIAL PLANNING
What is Financial Planning?
E veryone has needs and aspirations. Most needs and aspirations call for a financial commitment. Providing for this commitment becomes a financial goal. Fulfilling the financial goal sets people on the path towards realizing their needs and aspirations. People experience happiness, when their needs and aspirations are realized within an identified time frame..
The needs or aspirations are a good starting point, but in order to plan, these need to be converted into financial goals. The financial goals must be defined in terms of time horizon and the amount of money required to fund the goal.
Financial planning is a planned and systematic approach to provide for the financial goals that will help people realise their needs and aspirations, and be happy.

Need for Financial Planners
M ost investors are either not organized, or lack the ability to make the calculations described above. A financial planner’s service is therefore invaluable in helping people realize their needs and aspirations. .
Even if the investor knows the calculations, the knowledge of how and where to invest may be lacking. The financial planner thus steps in to help the investor select appropriate financial products and invest in them.
Transactions such as purchase of house or car, or even education, necessitate a borrowing. The financial planner can help the investor decide on the optimal source of borrowing and structure the loan arrangement with the lender.
Taxation is another area that most investors are unclear about. Financial planners who are comfortable with the tax laws can therefore help the investor with tax planning, so as to optimize the tax outflows.

Financial planners can also help investors in planning for contingencies. This could be through advice on insurance products, inheritance issues etc.
The financial planner thus is in a position to advise investors on all the financial aspects of their life.
Steps of Financial Planning
The steps in creating a comprehensive financial plan, as proposed by the Certified Financial Planner – Board of Standards (USA) are as follows .
- Establish and Define the Client-Planner Relationship
- Gather Client Data, Define Client Goals
- Analyse and Evaluate Client’s Financial Status
- Develop and Present Financial Planning Recommendations and / or Options
- Implement the Financial Planning Recommendations
- Monitor the Financial Planning Recommendations
