Six Steps of Financial Planning and the Need for Regular Review of Financial Decisions - Term Paper Example

The paper "Six Steps of Financial Planning and the Need for Regular Review of Financial Decisions" is a great example of an essay on finance and accounting. Financial professionals are highly respected professionals who play vital roles in the business world. In order to understand their roles and their importance in financial planning, I sought to interview a financial planner. I learned that he was a financial consultant/planner and his job entails giving advice on money management and preparation of firms and individuals financial plans.

  I learned that while undertaking financial planning he follows six major logical and sequential steps. Firstly, he determines a firm or individual’s current situation financially with regard to living expenses, income, expenses, savings, and debts (FSB & Wales, 2009). A foundation for this process is achieved through preparing a list of current debt and asset balances as well as costs of budgeted items. The second step involves developing and analyzing financial goals and targets periodically.

The analysis he said is vital in differentiating personal wants from needs and short-term and long-term financial goals of the business (FSB & Wales, 2009). Then they identify alternative courses of action. This step is vital in making quality decisions (FSB & Wales, 2009) as various courses of action fall into maintaining the earlier course of action, widen the current position, alter the current state of affairs, or follow a new line of action. In the fourth step, they evaluate alternatives while considering life situation, personal/organizational beliefs and values, and existing economic conditions.

In addition, they consider the opportunity cost (FSB & Wales, 2009). I learned from him that pertinent information is necessary at each step of the decision-making process. The fifth step is the creation and implementation of a Financial Plan of Action. This process entails selecting and applying ways of achieving personal goals (FSB & Wales, 2009). According to the finance professional, the sixth and last step is reevaluating and revising your plan. Since the financial planning process is an ever-changing ordeal that does not end on taking a particular action or adopting a particular stance (FSB & Wales, 2009).

Regular assessment of financial decisions is necessary. Regular reviewing of the processes of decision making will play a big part in aligning financial goals and activities with current life circumstances.He mentioned they aid most firms and individuals control their finances to attain optimal profits from all the money invested in any business undertaking. In order to achieve this objective and other financial goals, individuals/firms need to identify and set priorities (Leimberg, 2007). According to him optimal profits is as a result of an organized and sequential process commonly called personal financial planning or money management.

I learned from him that his role in preparing financial plans is very vital both at the organizational and personal level. An all-inclusive financial plan augments the quality of life and bolsters contentment by diminishing the level of uncertainty about future needs and resources (Leimberg, 2007). There are other advantages that arise from this process such as enhanced effectiveness and efficiency in obtaining, utilizing, and protecting economic and financial resources throughout the lifetime of an individual and any given business organization.

Moreover, their roles seek to bring about amplified control and regulation of a firm’s financial health affairs by doing away with bankruptcy, excessive debt, and economic dependence. In addition, well-planned and positively communicated financial decisions result in progressive organizational and personal relationships.