Intro To Financial Planning

Financial Planning

Individual Plans

It means different things to different people. It can take many forms, and it can be limited ("I need a will", "I need budget work", "I need a term life policy") or quite comprehensive ("I need a retirement income and tax plan", "I need an estate plan").

Here is a list of some of the major components of what we refer to as Financial Planning (in no particular order)

  • Income vs. expenses- budget work
  • Debt reduction and management
  • Estate planning
  • Auto, homeowners, and umbrella liability insurance
  • College planning
  • Asset protection planning
  • Retirement income planning
  • Asset management
  • Risk management/insurance planning
  • Tax planning
  • Inflation hedging/planning
For most people, when they think of Financial Planning, they think about their money (investments/assets management) or their retirement needs and concerns.

On this front, it is important to realize that the federal (and some states) government looks at our money in a certain way- in terms of how the money is taxed. In other words, from the government's perspective, the average American can have money (more property "assets") in three different types of accounts, or "buckets". For money that is taxed every year, we use the name "the taxable bucket" and these holdings can include CDs/bonds, stock dividends, stock sales, rental income, real estate sales, mutual fund sales, savings bond redemptions, bank account interest and anything else that generates a tax form every year.

The second "bucket" includes all of the types of accounts in the middle bucket below. The third bucket-the tax-free bucket, unfortunately has a much smaller list of possible holdings.

If the government looks at our money this way, so should we!