Financial planning is the process of mapping out where one's money will be invested, saved, or otherwise spent. This process can be done by an individual or business owner, or it can be done by a financial planning service that can lend expertise to the individual or business owner. The advantages of financial planning become apparent as one begins to accumulate wealth and invest it wisely: a financial planner can help a business or individual save for the future, invest and accrue interest, spend more wisely, save more effectively, and create a long term plan for retirement or wealth accrual.
The process of financial planning is not just for the wealthy. A person who finds himself in debt or in a financial situation that is not sustainable may want to consider financial planning that can help the person climb out of debt and begin to save for the future. A financial planner can help a person or business make decisions about money that will help that individual or business spend more effectively, save more quickly, and avoid common pitfalls such as debt accrual through credit cards, business or individual loans, and unwise spending habits. The planner will help the individual identify his or her budget problems and work to correct them quickly and effectively.
A person or business who has accumulated some wealth may have difficulty managing the money and deciding how to invest or save it. A financial planning session can help that business or individual invest wisely and safely, combining riskier investments with safer investments and savings methods. This type of financial planning is especially helpful if the person or business has many sources of income, investments, business holdings, and so on. A financial planner can come up with a plan to manage all these budgetary concerns and maximize profits while minimizing loss.
If the person considering financial planning is fresh out of college and entering the work force, a visit to a financial planner can help that person understand the best way to save for retirement, invest new income, pay off student loans and other debt, improve a credit score, and so on. Many people fresh out of college are unfamiliar with money management, so learning quickly can prevent loss of income, delayed retirement savings, and immersion in debt, which are all common among young people who are new to the workforce. Professional financial planners will charge a fee, but this fee will be worth the investment for people in complicated financial situations.