Financial Planner Basics

What is financial planning, and why it is crucial for you.

Even if you do not think you are a financial planner, you better start thinking like one fast. In the United States, there is an approximate of 5.6 million people who are either self-made millionaires or financially independent. And what is so hard to believe about that statistic, you ask? This is because that is only about 5% of the American population.

The remaining 95% of the American population (we’re talking about 106.4 million people here!) are not only not rich, but most of them are facing financial disasters, either owing to poor financial planning or foolish spending!. This is why you should start thinking like a financial planner. Financial planning is not so complicated, and it can make a huge difference in your life.

As the saying goes, “failing to plan is planning to fail”. Much of the same can be said if you do not plan your finances well, it does not matter if you are a high earner, you still need financial planner skills, to keep you form harms way and to ensure that your life will be financially secured.

The fact of the matter is that financial planning Is Not An Option, most of us need to think ahead today, and you should practice your financial planner skills right away to enjoy the money you make today in the future.

The basics of financial planning is to keep all your finance in order, this is very basic advice, alright. However, more often than not, we would rather concentrate on other things in life such as health, studies, work and more.

Think about the things you want to achieve in life, and how you are going to get there, financial planner always set his goals and puts some order in his thought before starting to actually put the wheels in motion. Financial planning can include buying a house, paying for your children education and thinking about a retirement fund.

Financial planning will help you use your current pay check and your saving to start working on a program that will give you peace of mind on the financial level, a financial planner will plan a budget according to every household’s expenditure budgeted and a savings plan drawn up, this will help you spend your money wisely and effectively.

A financial planner will consider having savings invested in an investment vehicle that pays higher returns than the normal bank account, it will add in some muscle to your savings and help you reach your financial goals in a shorter period of time.

By starting your retirement planning now (not later!), you can gauge how much money you will need to maintain your current lifestyle and where this money will come from. Many people, especially those who have just started working, always put their retirement planning on the back burner for reasons such as “I just started work” and “Oh, I am still young”.

Many, however, fail to realize that by starting early to save for retirement, you will be able to save and invest more due to the magic of “compounding interest”, provided that you invest your savings wisely. Maybe you do not have to wait until the age of 65 to retire. For all you know, by the age of 40, you might have already reached your financial independence and do not have to worry about getting up early to clock in or work until late hours because there are deadlines to meet.

Financial Education Can Pay Dividends for Youth

According to statistics from the National Council on Economic Education, only seven states require high school students to take a personal finance course while eight others require courses with personal finance content.

This was from a 2004 survey that also showed only nine states test personal finance knowledge. These numbers are beginning to change as the state of Missouri joins the fray and will require one-half unit of credit in personal finance instruction for graduation in 2010.

A 2004 national survey by the Jump$tart Coalition for Personal Financial Literacy measured 12th graders’ knowledge of basic personal finance. On average, students who participated in the survey answered correctly only 52.3 percent of the questions – an “F” in most high school classrooms.

Financial illiteracy isn’t a problem limited to students. Half of U.S. adults received a failing grade for their knowledge of basic economic concepts, according to the NCEE.

But there is hope in education. The National Endowment for Financial Education has confirmed that as few as 10 hours of classroom instruction can improve spending and saving habits.

Because financial literacy is fundamental to personal success and a benefit to society, American Century provides support for financial education.

In cooperation with a premier education consultant, the investment manager developed Tips for Kids and Tips for Life, curricula for use in the classroom. To date, these programs have been used by more than 3,000 educators in all 50 states. The free programs are delivered via the Internet to educators and are presented to education conferences to help users implement the programs in their schools.

American Century’s efforts to improve financial literacy extend beyond the Tips for Kids and Tips for Life programs. Free educational materials and tools are available on its Web site. And the information presented in American Century founder James E. Stowers’ “Yes You Can…” book series is designed to share the personal experiences and ideas that helped him become successful.