9 ways financial planning can help

1. A Financial Plan can help you set and achieve your financial goals

Setting and achieving financial goals is an essential part of a successful financial plan. With the help of a financial planner or adviser, you can get the guidance and support you need to identify and work towards your financial objectives.

A financial planner or adviser can help you determine what type of financial goals you should set, how much you should save, when to invest, and how to structure your investments for maximum returns. They can also provide insights on which financial products are best suited to your needs, such as funds, stocks, bonds, and property. Additionally, they can help you understand the tax implications of different investment strategies and advise you on ways to minimise taxes.

Having a financial plan that outlines specific steps for achieving your financial goals can also be incredibly helpful. It can provide clarity and direction when making decisions about your money and remind you of why you are taking certain actions. Your financial planner or adviser will be able to help you develop a plan that works for you, based on your unique circumstances and goals.

In summary, having the guidance of a professional financial planner or adviser is invaluable when it comes to setting and achieving financial goals. They can help ensure that you are making sound decisions with your money, and that you stay on track to reach your desired financial outcomes.

2. A well thought out financial plan can increases confidence

Having a financial plan in place can help you feel more financially stable and can give you measurable goals to work towards with an understanding of how they can be achieved and what you need to do. As you track and understand your finances more, it can help to reduce doubt or uncertainty about your decisions and help you make adjustments to your life to help overcome obstacles that could derail you.

As you gain more certainty then you can start to feel more confident that your finances are in a good shape and the areas of weakness are being worked on with an effective plan. For example, you can feel more confident in meeting any unexpected events (with a savings pot set aside) or more confident that you will be able to live the retirement that you want (as you have an effective pension forecast as part of your financial plan).

3. A financial plan can jumpstart your savings

A common reason given for not having a financial plan in place is “I don’t have enough money to save”. This is a misconception as planning, even in small steps, doesn’t need to involve a large amount of money.

A written financial plan can help savers prioritise their goals and can help understand where their money is going as well as help track how they are performing against their targets. As a financial plan allows you to better understand your current financial situation and make informed decisions about your finances, it can help you set realistic savings goals, develop strategies to reach those goals, and review your progress. A financial plan can provide you with the guidance and structure necessary to help you save money and build your nest egg and a financial planner or adviser can help you identify the best ways to save money, whether that’s through automated savings plans, reducing debt, investing in retirement accounts, or other strategies.

As such, good financial planning can have a profound impact on even lower-income households by helping improve budgeting and understanding their saving and spending habits, working out how to make more out of their money and lead to the start of a successful savings journey. With a financial plan in place, you can start building a secure financial future for yourself and your family.

4. Help plan for your retirement

Retirement planning is an important part of your financial planning journey. It involves making decisions about how you will support yourself financially during your retirement years and how to achieve those targets. A financial planner or adviser can help you assess your current financial situation and determine the best way for you to save and invest for retirement. They can also help you understand how much you are likely to have and how much you are likely to need to live the lifestyle you want. This can then lead to a plan on how to achieve your retirement goals, which could involve pensions, ISA, investments, and other sources of later life income. Financial planners can also provide advice on how to maximise your savings and minimise taxes. Additionally, they can help you decide when to take benefits from your retirement pot and the most effective way to draw the money out. A financial planner can also assist with estate planning and help you ensure that your assets are distributed according to your wishes after your passing.

5. A financial plan can help you create an investment portfolio

Your financial plan can help give you a full understanding of what your financial landscape is. You will get to know what your goals are, how much time you have to reach them, and how comfortable you are with risk. Once you have a comprehensive view, you can figure out how to reach each individual goal.

That will likely involve both savings—setting aside the money you’ll need in the short term or for emergencies—as well as investing, which is setting aside money you’ll need in the long term and that, ideally, can grow. With a financial plan as a roadmap, you’ll be better able to make thoughtful investing decisions—instead of heading out without a sense of direction and just hoping for the best.

6. Can help you better understand you current financial situation

Understanding your current financial situation is an essential part of financial planning. A financial planner or adviser can help you understand your income, expenses, assets, debts and net worth. Having this information will allow you to make more informed decisions about your money and how best to use it.

The first step in understanding your current financial situation is to assess your income and expenses. Income includes salary, wages, bonuses, dividends and other forms of regular income. Expenses include housing costs, transportation costs, food, entertainment and other regular monthly expenses.

Once you have a clear picture of your income and expenses, you can begin to assess your assets and debts. Assets include investments, savings accounts and pensions. Debts include credit card debt, mortgages, student loans and any other type of loan you may have.

Once you understand all of these components, you can calculate your net worth. Your net worth is simply the value of all your assets minus the total amount of your debts. This figure can be used to measure your overall financial health. You will also be able to identify areas of concern, such as over indebtedness or a pension too small for our future plans, and then this can be used to develop a plan to help achieve your goals.

Having a clear understanding of your current financial situation is key to being able to make sound decisions with your money. With the help of a financial planner or adviser, you can create a plan that takes into account all of your needs and goals and puts you on the path to financial success.

7. Help manage your Debts

Unfortunately debt is a reality for many people these days, and managing it can be overwhelming. Financial planning can help you to identify your debt, understand how it works and develop a strategy to manage it in the most effective way possible. A financial plan developed by a Financial Adviser can provide guidance on how to structure your payments, as well as when and how to make them. They can also help you to create a budget and stick to it. By working with a financial planner, you can identify potential opportunities to reduce the interest rate or total amount of your debt and work with you to develop strategies that allow you to repay your debt in a more manageable way.

8. Help you plan for unexpected events

Financial planning can help you plan for unexpected events and be prepared for them when they happen. Unexpected events could include job loss, medical bills, a natural disaster, or other unexpected expenses or events that could impact our life, job or family. Financial planning can help you to create an emergency fund to cover these types of costs and understand what type and size of emergency fund is best for your situation and budget. This will give you peace of mind knowing that if something unexpected happens, you have the funds available to cover it.

Financial planning also helps you make sure your insurance and protection policies are adequate and up-to-date to cover any unexpected events that may arise. This way, you won’t be caught off guard if something goes wrong as you will have protection in place to deal with the consequences. For example having the right Income Protection in place can help prevent against the impact of being unable to work due to illness, and the dire consequences that being off work for an extended period with no income can cause. A financial planner can help you assess your current situation and develop a plan to be ready for anything that comes your way.

9. A financial plan can lead to better habits

Financial planning isn’t just about investing and paying less tax; it’s about what money can do for your confidence, security, and quality of life—such as the protection that life insurance offers or the peace of mind that an emergency fund can provide. Research also shows that planning supports sound money habits as well.

There are good investing habits, and there are healthy money habits. A written financial plan can lead to both.

Bottom line

A financial plan may sound like a chore but for many people it can be an essential tool for helping save money and it can be the the foundation on which to build, understand and achieve your financial goals. Having a written financial plan can increase confidence, result in better financial behaviour and lead to greater peace of mind. By taking the time to create a comprehensive financial plan with the help of a financial planner or adviser, you can ensure that you have the best possible chance of reaching your financial goals and creating a secure financial future for yourself and your family. Please do get in touch if you would like to find out more – we are Financial Planners located in Bristol, are always happy to chat and offer a generous free consultation.

With the help of a financial planner or adviser, you can rest assured that your finances are in good hands.