Advice

5.25.2023

What Is The Purpose Of A Financial Plan?

James O'Reilly
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Most people that we meet have a sense of what they want to achieve in their lives.

These goals can be short-term (e.g. staying on top of debt or being prepared for a change in their lives) or long-term (clearing the mortgage, upgrading the home or retiring comfortably). 

Unfortunately, most people we meet suffer from misalignment: when your financial situation and decisions are not consistent with your goals and objectives. This results in a reduced likelihood of achieving your personal goals, and gives rise to other problems such as feeling overwhelmed by debt, unsure of how to invest money or simply not knowing where to start. This is where financial planning comes in.

In this blog post, we’ll define a financial plan and explore the importance of financial planning with a Melbourne financial advisor, especially when it comes to helping you achieve financial freedom. 

What is a Financial Plan?

A financial plan is a comprehensive document that outlines your current financial situation, goals and objectives as well as strategies to achieve those goals. It aims to help you achieve financial freedom and security by providing a roadmap to guide your financial decisions.

A solid financial plan offers direction and guidance for individuals looking to take charge of their financial future. Let’s look at some of the other benefits financial planning can provide.

Putting together a financial plan — the benefits 

Whether drafted by yourself or a qualified financial planner in Melbourne, a well-crafted financial plan can provide many benefits:

Clarifies financial goals and objectives

Most of us are motivated and willing to contribute to our financial futures, but sometimes, we’re unsure where to begin. A financial plan should help you to clearly outline your financial goals and objectives, which enables you to feel confident that your money is being put to best use.

Having clearly defined financial goals can also help you to remain accountable and may prompt you to re-prioritise spending and make better financial decisions. 

Provides an overview of your financial circumstances

As you begin putting together your financial plan, you’ll also gain insight into your current financial situation, helping you identify areas where you need to change your financial behaviours. 

This involves looking at your income, expenses, assets and liabilities. You need to know how much money you have coming in and going out, how much you owe and what you own to ensure your short and long-term goals are streamlined. 

Keep in mind that everyone’s financial situation is different, which means the best saving and spending strategies you put in place will be based on your unique financial situation.

Helps you track and evaluate progress and make adjustments

Establishing your financial plan is only half the battle — it’s also crucial to measure your progress to ensure you remain accountable and that your plan is still realistic. By monitoring your progress, you’ll also be able to adjust your financial strategies as needed. This may include increasing your savings rate, adjusting your investment strategy or taking advantage of other strategies to reduce tax or boost your wealth.

Northeast Wealth — trusted financial advisors in Melbourne

Financial planning is essential to building a secure and stable financial future. We understand how daunting it can be to build a financial plan, especially if you’re not feeling confident about money management.

At Northeast Wealth, our team of experienced Melbourne financial advisors can help you navigate the complexities of financial planning and create a customised plan tailored to your unique goals and circumstances. From retirement planning and investment management to estate planning and tax strategies, we offer a comprehensive range of services to help you achieve your financial goals. 

Take control of your financial future and get started on the right path towards financial freedom by contacting us today.

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