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Understanding Financial Planning
Financial planning is not only for “the rich” but also for “those who want to realize their life objectives” regardless of their wealth status. Anyone who manages their life properly and realizes their life objectives more independently without being bound by financial limitation can make use of financial planning. Moreover, since financial planning includes a method of fund allocation, it is different from an asset increase, which is the financial technology for increasing assets and general asset management. Financial planning is no longer a luxury only for the rich. To plan for the life we want, financial planning is an essential course that is now available to almost everyone.
Why is Financial Planning Necessary?
As the world changes day by day, so should our life’s plan. Moreover, developing a proper asset management method is becoming an ambiguous task as time goes on. Like finding your way in a foggy, unfamiliar place, financial planning is like a lamp illuminating your way, a life map for your future. The following are examples of changes in the social and economic environments that make financial planning through asset management a necessity:
01 The rate of Korea’s aging is the highest among OECD countries; the average life span is also increasing rapidly. Thus, people are expected to live for 25 years or more after their retirement.
02 As their number of days after retirement has increased, people can no longer prepare for their living expenses properly using only their retirement benefits or national pension.
03 Among the expenses of individuals and their families, medical and educational costs, as the most significant, are increasing much faster than the rate of inflation.
04 Tax laws, which influence net income, are amended every year. Therefore, people need to adjust their personal budgets as needed based on any tax law modifications.
05 The concept of a lifetime job is now a thing of the past. A much newer, elaborate plan is needed with regard to one’s savings, retirement, tax liability, and inheritance.
06 06. Since people are generally marrying later in life, they also have kids later than before. Thus, people should prepare for life after retirement while supporting their parents and their children’s education.
What are the Benefits of Financial Planning?
Imagine what would happen if you built a house without a blueprint. Construction would most likely be completed later than scheduled, unwanted results may occur, and even worse, you may find you have no house built at all. If you want to realize your dream, financial planning will help you in the same manner as a precise design helps in building a house.
01 Financial planning helps you understand your financial status clearly.
For a clearer understanding of where and how you spend your money, as well as how much fortune you can inherit and how you should make use of your capital to realize your life goals, you should first understand your financial status.
02 It indicates the direction of financial planning, and helps to stay conservative.
Without proper advice, you are likely to make impulsive financial decisions. For example, you might purchase an insurance policy simply because you have been persuaded to do so by a friend or acquaintance, invest huge sums of money in the latest investment craze, or plan an extemporaneous tax strategy. While such impulsive activities might not cause financial problems or complexities, they don't generally produce the best results.
03 Financial planning integrates and manages your assets according to your objectives.
Considering your overall financial status, coming up with a harmonized financial plan helps you realize your life goals.
04 Financial planning gives you peace of mind, thereby improving your quality of life.
If you know in detail the status of your assets and investment capital and how to realize your objectives, you will have much greater confidence regarding your future and personal relationships.
When is Financial Planning Needed?
Ask yourself the following questions. If you answer yes to one or more of these questions, then it’s time for you to find a financial planner.
Do you believe that you have made a lot of money, but feel like you have less in your wallet?
Are you confused about where to invest?
Do you know the exact status of your investments?
Are the risks accompanying your investments appropriate to your objectives?
Is the portfolio for realizing your life goals composed properly?
Is there a difference of opinion between you and your spouse concerning the management of your money?
Do you know the types of insurance policies and proper coverages?
Have you established a concrete estate plan that reflects your will?
Do you think you’re paying too much in taxes?
Are you worried that your retirement savings may not be enough?
What is Financial Planning?
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