What is the role of a financial planner and why is it so essential to create optimal financial planning?

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A financial plan is a road map that helps you achieve your goals. Financial planning can be done alone or with a professional.

A financial plan paints a comprehensive picture of your current finances, your financial goals and any strategy you have set to achieve those goals. Good financial planning should include details about your cash flow, savings, debts, investments, insurance and every other element of your financial life.

What is financial planning?
Financial planning is an ongoing process that can reduce your stress when it comes to money, support your current needs, and help you build a good financial foundation for your long-term goals, such as retirement.

Creating a financial plan is important because it allows you to make the most of your assets, helps ensure you meet your future goals and gives you the confidence to handle any bumps along the way.

You can prepare a financial plan yourself or use a professional expert in the financial field, who is called a “financial planner”. The wise company employs professional financial planners with rich experience and knowledge who help create a high-quality, long-term financial plan to achieve the goals and objectives of each client. Financial planning with a professional financial planner allows you to examine your current financial situation with a professional and skillful eye and map out a clear and detailed path that will answer each of your goals and any current financial need that may arise along the way.

When you want to create a cohesive, efficient and particularly profitable financial plan, turn to an expert financial planner. However, we have some great tools to help you create a financial plan.

Financial planning in 5 steps

1. Define financial goals
A good financial plan is guided by your financial goals. If you approach your financial planning from the perspective of what your money can do for you – whether it’s to buy a home or to help you retire early – you’ll make saving more intentional and focused.

Turn your financial goals into inspiration. Ask yourself: what do we want our lives to look like in five years? And how in 10 and 20 years? Do we want to own a car or an apartment? Do we want to be debt free? Maybe pay our children’s tuition? How do we imagine our life after retirement?

Having concrete goals can make it easier to identify the next steps and complete them, and provide a guiding light as you work to make those goals a reality.

2. Track your money
Get a sense of your monthly cash flow – what comes in and what goes out. An accurate picture is key to creating a financial plan and can reveal ways to direct more towards savings or paying off debt. Seeing where your money is going can help you develop immediate or medium-term and long-term plans.

For example, developing a budget is a typical immediate plan. There is a general recommendation for financial planning based on the 50/30/20 budget principles: devote 50% of your salary to needs (housing, utilities, transportation and other recurring payments), 30% to wants and luxuries (restaurants, clothing, entertainment) and 20% to savings purposes and repayment of debts if any. Paying off debt or building savings for a vacation or car swap are common medium-term plans, and retirement planning is a typical long-term plan.

3. Create an emergency plan
The basis of proper financial management is the allocation of cash for emergency expenses. You can start small by creating savings of a few thousand shekels that are enough to cover emergencies and small repairs so that an unexpected bill does not cause sudden debt. Your next goal could be to create more significant savings that embody several months of work and enable the financing of your lifestyle for several months.

4. Deal with high interest debts
A crucial step in any financial plan: repayment of “toxic” high-interest debt, such as credit card loans and bank account overdrafts. The interest rates on some may be so high that you end up paying back two or three times what you borrowed.

If you are struggling with multiple debts, a debt consolidation loan or debt management plan may help you better manage your debts and eliminate them optimally.

5. Invest in building savings and investments
Investments and savings sometimes sound like something reserved for wealthy people, but they are not. Even people who do not earn a high salary and do not own assets, can, with the help of professional financial planning, channel part of their income in favor of savings and investment. Therefore, Ben, if you have money and need a plan that will allow you to manage and leverage it well, and whether or not your current financial situation is not good, a professional and skilled financial planner will be able to build a high-quality, long-term financial plan for you that includes investments and savings that suit you and that will serve you in the light of time.

Do you need help with financial planning?
A financial plan is not a static document – it is a tool to track your progress, and one that you need to adjust as your life evolves. It is essential to re-evaluate your financial plan after important life milestones, such as a wedding, starting a new job, having a child or losing a loved one.

If you want to get professional help in managing certain tasks and in optimal financial planning – you don’t have to do it alone – contact us and a professional and expert financial planner will help you build an excellent financial plan that is just right for you.

Why is professional financial planning important?
Professional financial planning can help you feel more confident in making decisions during bumps in the road – such as, for example, a recession or inflation. In most cases, people who have a written and organized financial plan maintain healthier saving and investing habits, with a higher percentage of those with a plan having a three-month emergency fund compared to those without a plan.

After addressing your basic needs and short-term goals, a financial plan can also help you tackle big, long-term goals.