The Scope of Personal Financial Planning


Monday, June 13, 2016 /R.A. Bridges & Alero Awoyemi 

Personal Financial Planning is the base on which family and personal wealth are built. It is the tool that helps us efficiently administer our economic resources and, therefore, reach our financial goals. In recent years the process of family oriented financial planning has gained importance in many regions of the world as it is contributing to their progress. This is due to the fact that the growth of the basic enterprise (the family) has a positive influence on the entire environment and is reflected in the country´s economy. It is not a coincidence that this discipline is expanding at a great pace in developed countries. 

What is the scope of Personal Financial Planning?
This discipline covers the fundamental areas related to theeconomic welfare of a person or a family which covers the eight(8) basic needs of man. These are:

     Basic Financial Planning – Savings & Loans

     Essential Assets Planning- Homes

     Insurance Planning - insurance

     Investment Planning – investments

     Retirement Planning – Retirement/pensions

     Estate Planning - Homes

     Tax Planning – Taxation

     Health planning - Health

What is the purpose of Basic Financial Planning?
Basic financial planning is the most elementary part of personal finance. It consists of the plans, activities and actions of a person in his regular day to day money use: cash management, checking account, credit/debit cards, personal balance, budget, income and expense statement, etc. Financial planning will provide the tools and processes to carry out these tasks in a tidy and systematic way. 

What is the purpose of Essential Assets Planning?
This part of planning focuses on the plans and strategies that a person should put in place in order to acquire the essential goods that are indispensable to guarantee good quality of life: a home, a vehicle, furniture, electronic equipment, appliances and other assets that a family requires to feel that they have a home and a comfortable life. 

What is Insurance Planning?
Insurance planning is about the provisions a person should make in order to anticipate and protect his/her family against potential risks that could threaten their well-being. Risk management is a fundamental part of Personal Financial Planning. This will help people to determine which contingency measures they can assume directly and which ones they should share with an insurance company.In this part of the world, we have found out that a lot of people are not knowledgeable in this aspect and do not see a need for having an insurance plan in place.  

What is an Investment Planning?
Investment planning is a process the purpose of which is to help people invest their savings efficiently. It has the necessary tools to help people develop effective investment strategies which will permit them to achieve an optimum performance, that is, the maximum return under a level of risk that each person can cope with. 

What is Retirement Planning?
A retirement plan, also known as a pension plan, is just another name for a long-term investment plan. The objective is to accumulate the necessary capital to obtain a profit that replaces the regular income when the period of active work finishes. 

What is Estate Planning?
Estate planning goes beyond the simple distribution of the inheritance. It includes other topics such as the administration of our goods and the care of our dependents, in case of a serious illness, senility or mental disability, and, of course the will. 

What is Tax Planning?
Tax planning will help you find strategies that will allow you to lower your regular tax payments. The state has an important role in our financial plan. On one hand it determines the socioeconomic environment and its policies and regulations, and it also provides us with the macro infrastructure and services that help businesses to prosper and generate income as well for the owners as for the employees. It also provides direct income for many people. It is our duty to contribute to the national fund by sharing a part of our profits. However, we should do so intelligently, in such way that we pay. 

To be able to take charge of your financial future, the issue of Personal Financial Planning is a very serious issue that should not be overlooked. As typical Nigerians, we are not known for been able to draw up a personal financial plan and religiously comply to it, if we have been able to do so, a lot of us would not be under so much pressure to stay above waters during these difficult period in the life of this nation. 

However, it is never too late to start. Under the Proshare Education, Enlightenment and Empowerment campaign, we would be looking at the various aspects of Personal Financial Planning and how we can apply the basic principles to our daily lives.

It is time to take charge of your financial future than to blame others (either the government for the policies they have put in place, your family members for not helping out when they should have, or your father for not positioning himself to put something aside as an inheritance for you – but if you look at it, what are you putting aside for your kids, or your friend for betraying you, or your spouse for not believing in you and giving up on your dreams.) There is enough blames to go around, but the key is that ONLY you are responsible for your life and your financial future.

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