What is Financial Planning?

“It takes as much energy to wish as it does to plan.”

--Eleanor Roosevelt

The best way to take charge of your money is to have a plan for it. Instead of thinking about money as just something to spend, think about making your money work for you.

Financial planning is the process of evaluating your present financial situation, identifying financial goals, preparing a written plan to achieve those goals, and carrying out the plan.

It’s an unnatural act. The brain is wired to make us undervalue long-term goals and exaggerate the cost of short-term sacrifice. Yet, according to Money magazine, people who do even a little financial planning had twice the savings of those who did almost none.

What is a Financial Plan?

A financial plan is a personally designed document that identifies your resources, expenses, and goals, and combines them into a “road map” to get you where you want to go. A financial plan will help you achieve the things that are most important to you, whether that means paying off your student loan debt or creating a fund for your first home. It’s broader than a budget, encompassing savings and investments. It is a living document that benefits greatly from frequent revisiting, reassessment, and retooling.

Who Needs a Plan?

Everyone. If you haven’t made your financial plan, then your plan is to fail.

What Goes Into a Financial Plan?

• Your resources - sources of income, allowances, loans for school
• Your expenses from your budget worksheet
• Your goals and dreams
• Your plan of attack

This is an excerpt from Managing Your Money After College Guide which is included in our Real World 101 Care Packages. Visit our Care Package page to find out how to get one for yourself or for a lucky college grad!