Like many things in life, financial planning seems to mean a lot of different things to a lot of different people. The definition we use at Bare Financial is the ongoing designation of limited financial resources to meet unlimited changing alternatives.
This definition is visually depicted to the right. It begins with wise, proactive, ongoing designation of our income, using discernment to divide the cash into five categories – Giving, Taxes, Living Expenses, Debt, and Savings.
From here, sound financial planning sets up goals, which can be broadly classified into six categories – Financial Independence, Charitable Gifts, Freedom from Debt, Lifestyle Desires, Family Needs, and New Business.
In short: financial planning means wise management of the 5 short term uses of money to help fund the 6 long term goals of money. And as financial planners, we want to help you manage everything from the top to the bottom, with the realization that there truly is no such thing as an “independent financial decision.”
Sound financial planning typically leads to eventual wealth management.
