What is the meaning of financial planning?

Financial planning involves analyzing a client's entire financial picture and advising them on how to achieve their short- and long-term financial goals. Financial planning is an ongoing process that can reduce their stress over money, support their current needs, and help them accumulate savings for their long-term goals, such as retirement. Advisors can earn certifications focused on financial planning, the most notable of which is that of “certified financial planner” (CFP). The cost of financial planning depends largely on the advisor you work with and on that advisor's fee schedule.

Creating an emergency fund will help ensure that a financial emergency doesn't turn into a catastrophic financial event. Financial planning can help you feel more confident about overcoming obstacles along the way, such as a recession or historic inflation. However, the same professionals who offer asset management services can also offer financial planning. To find an advisor who can help you create a comprehensive financial plan, try SmartAsset's free financial advisor search tool.

An accurate picture is key to creating a financial plan and can reveal ways to spend more money on savings or debt repayment. A financial plan is a document that contains a person's current financial situation and their long-term monetary objectives, as well as strategies for achieving those goals. It's helpful to reevaluate your financial plan after you've had important moments in life, such as getting married, starting a new job, having a child, or losing a loved one. A financial plan isn't a static document, it's a tool for tracking your progress and one that you must adjust as your life evolves.

Your total fee is likely to depend on the value of your assets under the advisor's management, as well as on the complexity of the financial planning services you need. A financial plan is a complete description of the steps you'll need to take to achieve your goals. However, a professional financial planner may be able to help you choose a detailed savings plan and specific investments to help you finalize them, one by one. Financial plans don't have an established format, although good ones tend to focus more or less on the same things.

Online services, such as robo-advisors, have also made getting help for financial planning more affordable and accessible than ever.