Financial Planning: Money Complicates Life

Financial Planning: Money Complicates Life

When it comes to Financial Planning, one may as why it seems like all financial decisions are so complicated. But the answer is simple: Money! And the more complicated the professionals make it, the more you will need them. It’s very self-serving.

There’s nothing wrong with professional advice, but let’s face it, most financial advisers are not familiar with the unique set of circumstances that a felon has to deal with. Professional advisers also prefer to deal with affluent clients (because they can pay more) and charge big fees and commissions. It doesn’t make sense sometimes, but banks lend money to people who have money and not to people who don’t, but who really need it more. Although choosing where to bank is not like choosing which grocery store to shop at, but it’s really not that far away.

Let’s start by saying that the best financial decisions are made when you personally understand them and are in consideration of six things.

Six Areas of Financial Planning

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

Let’s Buy a Home

Financial Planning

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. (Cash Flow Planning)

How will you protect that home and the property held in that home? (Risk Planning or Risk Management)

Does the home purchase have tax advantages? (Tax Planning)

Are you and your family suitable for this real estate based asset investment and what is its expected return? (Investment Planning)

Does this home purchase bring you closer to or further away from you and your family’s future goals/retirement goals? (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? (Estate Planning)


Leave a Reply

Your email address will not be published.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