Financial planning has become the umbrella, catchall phrase for an abundance of different financial services. A lot of people select and manage a portfolio of stock and mutual funds and think that's financial planning. It's not. That's investment planning.

Others focus narrowly on one financial area, such as retirement planning, and think that's financial planning. It isn't that either.

So what is financial planning? Let's start with an easy definition.

"Financial planning is the process of meeting your life goals through a
'big picture' approach to managing your finances."

Financial planning is a process, not a product

It's something you do either by yourself or with a qualified professional, and it requires a commitment of your time and your energy. Financial planning requires you to see how each of your financial decisions relates to your overall financial picture, so that no decision is made in a vacuum. It is an integrated approach to your financial affairs.

Financial planning includes defining and setting your short-term and longer-term life goals. Through the process of financial planning, you can decide what's most important to you and decide where you want to be at some point in the future. Some of these goals might be:

• Owning a house, taking a vacation, buying a new car
• Sending children to private schools or paying for college
• Retiring early
• Becoming wealthy and leaving a large endowment to your alma mater

Once you know where you are headed, the next stage of the financial planning process is to assess where you are right now by analyzing your current financial situation and commitments.

• Have you saved enough to put the down payment on your dream home?
• Are you comfortable with current allocations in your investment portfolio?

Once you've decided on what you want and know what your financial situation is, the fun part of financial planning begins-deciding how to get there.

The financial planning process includes identifying a variety of realistic strategies to help you achieve those all-important personal goals through a sensible plan for managing your finances. A sound plan may include making regular contributions to an individual retirement account (IRA) or 401(k) plan. It may include squirreling away dollars into a college savings plan or shifting assets into a more aggressive investment plan that will help you meet a particular goal. It may involve revisiting your spending or saving patterns now for payoff later, or it may include protecting the worth you've accumulated so far.

Whatever it involves, the "planning" part of financial planning is only the beginning. A plan is only that —a plan—if you don't put it into action. The next stage of the planning process involves taking all the information you've gathered on where you are now, where you want to be, and how you plan to get there, and making it happen!

Remember that financial planning is "a work in progress." Periodically you'll need to review your strategies to gauge how well certain programs are working for you or adjust your goals in response to whatever life throws your way. Changing your strategies as necessary will keep you on track to meet your goals.

Estate Planning, Wealth Accumulation, and Protection Telephone: (804) 935-8510 ● Secondary Telephone: (804) 364-5071 Fax: (804) 364-6387 ● E-Mail Us
Street Address: 4860 Cox Road, Suite 200 Glen Allen, VA 23060 Map and Driving Directions	Mailing Address: P.O. Box 4066 Glen Allen, VA 23058-4066
Virginia estate planning attorney Robin S. Gnatowsky, CFP,® is a CERTIFIED FINANCIAL PLANNER™ practitioner, a certified public accountant (CPA), and an attorney focusing on financial planning, tax planning and estate planning. Richmond ● Glen Allen ● Midlothian ● Virginia Beach ● Virginia ● Florida ● Maryland ● Washington, DC