Personal Financial Planning

Personal financial planning is extremely important to your success in life, but it's not exactly an easy task to undertake. Much more than just budgeting, personal finance financial planning is an all-encompassing lifelong endeavor.

The role of personal financial planning is to help you reach all your financial goals – pay the mortgage, send the kids to college, retire by a certain age, and make sure your family is taken care of should the unspeakable happen. While budgeting and balancing your checkbook are all parts of personal finance, financial planning covers all these areas as well as insurance, retirement funds, legal protection, investing, credit, and so forth.

Basics Of Personal Financial Planning

In order to set more accurate and realistic goals, you should start some kind of journal of personal financial planning. This would include somewhere to keep all your receipts, contracts, certificates, and anything else financial, including a log for earnings and expenditures. Once you know what you have, you should start figuring out what you need.

This section of personal financial planning is quite possibly the most important, and should be done as soon as humanly possible. It's never too early to plan for your family's wellbeing and retirement, but it can certainly be too late.

Your income is your greatest asset – you should plan to protect it with life and health insurance in your personal financial planning. The face value of your life insurance should be at least 5 times your annual income, so that your family can have the time they need to recover from the loss of your income.

In your personal financial planning, you should also allow for a retirement nest-egg of at least 10 times your annual income, plus 3% for inflation, at the moment you retire. At least half of that should remain in some kind of investment account at all times once you retire, so that you can ensure the longevity of your retirement.

The last step of personal financial planning is figuring out how to get what you have to match what you need, and set out goals for what you want. This will require quite a bit of time, and lots of careful calculating with the help of a financial advisor.

Personal Financial Planning Tools And Aids

You can use a sample personal financial plan to assist in your personal finance planning. A personal financial plan example will show you how to plan, what you need to plan, and give you a general idea on what kinds of goals you should seek to make for yourself.

A personal financial planning website is an excellent resource for free personal financial plans, recommendations for personal financial planning software, and free personal financial planning templates. Such websites also typically offer personal financial planning calculators, and personal finance planning advice.