Why is financial planning important? Shouldn’t conventional wisdom state that you should just spend your money as you get it, pay your bills, and then save some for a rainy day or a special occasion such as a trip or a wedding? Why do you need to engage in detailed and sometimes confusing financial planning activities that can involve stocks, CDs, IRAs, bonds, and money market accounts? You’d be surprised at all the ways financial planning can help you build a more secure future for yourself and your family. Here are the top 3 reasons financial planning is a good idea.

1.  You can protect your household against unforeseen loss of income. Let’s face it. The economy isn’t exactly great right now. You never know when you’re going to get laid off, even from a good job. You also don’t know when you might suffer an illness or injury that forces you to go out on disability and take a reduction in pay. Financial planning can help you avoid monetary hardships during these times by having enough liquid assets to pay all your bills and keep you and your family living in the lifestyle to which you are accustomed, even if your loss of regular income lasts for a long time.

2.  You can pay for big expenses without having to stress out about it or take out a second mortgage on your house. Big expenses mean things like the college educations and weddings of your children, or unexpected medical expenses. If you start saving now, using the right type of interest bearing accounts, you will have the necessary money when the time comes and won’t be scrambling to put funds together because you didn’t plan properly. A financial planner can help you decide which types of savings accounts are best for your goals.

3. You can be sure to retire in style and without being a burden to your family. Your financial planner will put you on the right path to a comfortable and financially independent retirement. These are just a few of the many reasons showing you the answer to the question, “Why is financial planning important?”

This is the first installment in our investing series. Be sure to check back for updates…

Filed under: Investing

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