Six Main Core of Financial Planning

What is Financial Planning?

The term “financial planning” often intimidates people, especially those who think financial planning is for the high-income earner and the rich. But is this true? If not, what is it actually? Generally, financial planning involves taking a broad view of one’s financial affairs covering many areas of wealth management, and then going through a step-by-step process to solve financial problems and achieve financial goals.

The process involves gathering relevant financial information, determining your goals in life, examining your current financial status and coming up with a strategy or plan as to how you may achieve your goals given your current situation and future plans. These goals in life may include buying a home, saving for a child’s education, planning for a comfortable retirement or starting a business.

What is included in Financial Planning?

Here are some core elements of financial planning:

A) Cash Flow Management

  • Assessing your current financial net worth (what you own minus what you owe). This will generally tell you whether you are on your way to financial freedom or financial disaster.
  • Budgeting
  • Eliminating debts
  • Building savings

B) Risk Management

  • Ensure that all your assets and family are well protected by having adequate insurance coverage

C) Investment Planning

  • Once you have determined the amount of money you would like to save, you should consider where to put your savings with the aim of receiving a higher return than your normal savings account. An investment strategy in meeting your stated financial goals.

D) Retirement Planning

  • You are not going to work for whole life. When old age symptoms start to kick in or you have reached the mandatory retirement age, you will need to retire. Hence, having a retirement plan regardless of your age is essential.

E) Tax Planning

  • Tax planning effects everyone who receives income, yet it is an area largely ignored or forgotten by most people. Therefore, this area involves strategies to make the most of your income, stocks, real estate and property, under the local tax regime.

F) Estate Planning

  • Having an estate planning or will shall ensure that your wishes for the future are carried out. In addition, an estate plan or a will can provide financial security for your family, ensure your property is preserved and passed on to your beneficiaries, and avoid dispute among family members.


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