Financial Planning Decisions

Financial Planning Decisions

All Personal Financial Planning decisions fall into six understandable disciplines. And since most of us don’t like the sound of the word discipline, let’s just say they fall into one of six financial boxes or areas.

They are:

  • Cash Flow Planning / Cash Management
  • Risk Management
  • Investment Planning
  • Tax Planning
  • Longer Range / Retirement Planning
  • Estate Planning

An image of a Six Areas of Financial Planning Chart.

As you see from the illustration, they are all interrelated, interconnected.

Now let’s discuss each one and make some common sense on how this interrelationship works. For example: Let’s buy a home.

You would need to know how much house you can afford. We call that Cash Flow Planning.

How will you protect that home and the property held in that home? That process is called Risk Planning or Risk Management.

Does the home purchase have tax advantages? That’s Tax Planning.

Are you and your family suitable for this real estate based asset investment and what is its expected return? That’s Investment Planning.

Does this home purchase bring you closer to or further away from you and your family’s future goals/retirement goals? That’s Longer Range Planning also known as Retirement Planning.

How will you title this home: your name or joint names? And if you unexpectedly passed away, who would you leave it to? That’s Estate Planning.


Having these ducks in order makes this home purchase logical, affordable, and done with a level of confidence, which can make the process of making financial planning decisions enjoyable even though challenging, involving, and focused. It’s the complete opposite of “What have I gotten myself into?” And you won’t become disabled over the stress. The important thing is to see the inter-relationship. It’s a lot more than thinking you can afford a home because you have so much in the bank or you make so much per week. Or the best one is asking the real estate agent if you can afford a home. Now there’s an unbiased opinion! NOT! You need to know if you can afford the home.

Leave a Reply

Your email address will not be published. Required fields are marked *