You may have come across the term "financial planning" recently and wondered what it means. You may have decided to start your own finanical plan but you're not sure how. Or you may feel it's time you went to a finanical planner for some professional advice. Whatever your situation, the following infromation can help you decide what's right for you.

WHAT IS FINANICAL PLANNING?

Financial planning is the processs of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child's education or planning for retirement.

The financial planning process as described by CFP Board, consists of six steps that help you take a " big picture" look at where you are financially. Using there six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals.

The process involves gathering financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans.

THE FINANCIAL PLANNING PROCESS - consists of the following six steps

1. Establishing and defining the client -planner relationship.

The financial planner should clearly explain or documant the services to be provided to you and define both his and your responsibilities. The planner should explain fully how he will be paid and by whom. You and the planner should agree on how long the professional relationships should last and on how decisions will be made.

2. Gathering client data, including goals.

The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and finanical goals, understand your time frame for results and discuss, if relevent, how you feel about risk. The finanical planner should gather all the necessary documents before giving you the advice you need.

3. Analyzing and evaluating your finanical status

The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies.

4. Developing and presenting financial planning recommendation and / or alternatives.

The finanical planner should offer finanical planning recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate.

5.Implementing the financial planning recommendations.

You and the planner should agree on how the recommendations will be carried out, The planner may carry out the recommendations or serve as your " coach", coordinating the whole process with you and other professionals such as attorneys or stockbrokers.

6. Monitoring the finanical planning recommendations.

You and the planner should agree on who will monitor your prograss toward your goals. If the planner is in charge of the process, she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes.