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Financial Planning

Financial Planning

August 07, 2022

What Is Financial Planning?


Hi everyone, and welcome back to Melissa Making Cents!


Before we start, I want to take just a second to re-introduce myself! To all my regular readers, you already know who I am. Still, my name is Melissa Cox, and I'm a CERTIFIED FINANCIAL PLANNER™, Financial Coach, and College Planner.


You might be thinking, "Melissa, we already know you… why are you telling us your name and what you do?". Well, the thing is, the other day, I realized that I've done a disservice to you all and this blog. I haven't ever adequately introduced who I am, what I do, and what financial planning is. However, I'm going to chage that...TODAY.

You see, while we've discussed what financial planning is and what it does, each week we discuss the basics of financial planning. I realized that I haven't put everything together into one easy-to-digest blog post. So here we are! It's time for some re-introductions and removing any pretense so we can all have a clear foundational understanding of financial planning.


What is Financial Planning? 


Learn about Financial Planning from Melissa Cox CFP

Regarding financial planning, there are only about one hundred million definitions to choose from. So, the information is a little sparse (sarcasm intended). Luckily, what financial planning is can be explained by the name. Financial planning is essentially assessing your income, obligations, and goals, then taking that information and creating a plan that will allow you to achieve those goals.


Melissa Cox CFP explains the mechanics of Financial Planning

Okay, I'll give you a more formal definition. According to SmartAsset, "Financial planning is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals. As a result, financial planning often delves into multiple areas of finance, including investing, taxes, savings, retirement, your estate, insurance, and more."


What is a Financial Planner?

Melissa Cox CFP explains what a financial Planner is

Okay, now we know what financial planning is, so what's a financial planner?



In essence, a financial planner is someone who helps you create and execute your financial plan. We do multiple things and wear many hats. For instance, with any given client or meeting, I could be helping them plan to save for a significant expense, create a retirement plan, minimize or eliminate debts, or even work on their investing strategy. However, the work doesn't stop there! A financial plan also grows and adapts as your life changes, motivates you to stick to your budget and hit your goals! We're like a personal trainer, but for your wallet and/or purse!


Why Would I NEED a Financial Planner?


Melissa Cox CFP explains why you need a financial planner

Well, some reasons you might want to utilize a financial planner may surprise you! While some tools and apps are popping up all over the place that'll allow you many of the same tools that financial planners use, having the tools is (in reality) a tiny part of the journey of financial planning. A lot of work, knowledge, and information goes into financial planning. Financial planners know the ins and outs of investing, budgeting, and the rules and regulations that come with them!


Financial Planners are like personal trainers for your finances

So, while theoretically, anyone could create and execute their own financial plan, part of the issue is opportunity cost. You do what you do (hopefully) because you love it! Creating your financial plan, and having the knowledge to do so, could take gigantic chunks of your time and energy, which most people don't have after the work-day ends. The economy and financial sectors are also constantly changing, so your goals are likely to be a moving target. Having a great financial planner on your team means that you can focus on the things that matter to you, like work, spending time with your family, traveling, and relaxing – while someone else handles the long-term financial roadmap of your life.


Some Financial Planning Basics!

Melissa Cox CFP explains financial planning basics.


Budgeting, assessing risk, record keeping, and developing healthy financial habits are just a few of the areas that I help my clients with. To start, we create a budget by analyzing your yearly and monthly cash flow. This helps us decide how much you can comfortably put aside for your savings, investments, and retirement! Next, risk assessment gives us a good idea of how risk averse you are, influencing how aggressive we want to be with investing! Lastly, record keeping and healthy financial habits are the basics of financial planning! These let you have an excellent record when an unexpected hiccup comes up down the road.


Learn what goes into a financial plan

Financial planning is for everyone. Seriously, just about anyone could stand to gain from having a great financial planner at their side. It's beneficial to young professionals, newlyweds/new parents, those who are planning for retirement, those looking to minimize or eliminate debt, and those who have financial goals and obligations.


However, there's an essential to financial planning that many people might not realize! Financial planners are actually legally obligated to work in YOUR BEST INTEREST. Obviously, you want to have and develop a good level of trust with whoever you're working with.


A Basic Financial Plan


Melissa Cox CFP explains a basic financial plan

Everyone is different, and each person's financial plan should be different and custom-tailored. However, here's a basic idea of an approach to creating a financial plan!


-           Create a Vision/Goals


The first thing to do is visualize the future! Where do you want to be in five, ten, twenty, or thirty-plus years? Do you want to retire early? Do you want to travel? Do you want to have a million dollars? Believe it or not, all those things are within the realm of possibility with excellent financial planning. The goal is to create concrete and specific goals and timelines to help us plan!


-           Strategizing


Now that we have your goals and vision for the future in mind, it's time to start putting pen to paper. With your specific goals and vision in mind, we can develop a comprehensive plan that details and outlines strategies to get you where you want to be with a realistic timetable.


-           Planning for Emergencies


One of the first concrete steps in financial planning is to plan for emergencies! We'll create an emergency budget and emergency fund that you'll be able to fall back on should you not be able to work or have a significant and unexpected expense. Planning like this allows us to avoid falling back on and relying on borrowing money (which can be exorbitantly expensive) and instead will enable us to fall back on our own savings!


-           Reduce Debt


Once we've gotten to a point where emergencies are covered, we can begin eliminating debt! That means it's time to start aggressively paying off the things that are munching up your monthly and yearly income with interest.


-           Maximize Employer Offerings


Your employer may offer to match specific plans and accounts! If that's the case, we'll likely want to take full advantage of those plans and investments. After all, you never want to leave free money on the table if it's a good deal for you!


-           Investing for Your Goals & Retirement


Next, it's time to start really planning and taking steps towards retirement! We can get a bearing on what the best plans/accounts are for you and your goals! For instance, if you want access to a certain amount of your money, then it's essential to plan for that! We can create a portfolio and retirement plan custom-tailored to you, your timeline for retirement, and liquidity needs/wants.


-           Estate Planning


Unfortunately, time catches up with all of us eventually. And there's no point in creating great wealth if it's going to be a point of contention among your family when you're gone. That's why part of financial planning is creating a solid estate plan that helps take emotion out of the equation for your family upon your passing.

** As a CERTIFIED FINANCIAL PLANNER™, I do not provide legal advice. Instead I create a plan of action, and together we work with a qualified attorney to implement your estate plan.


When Should You START?

CERTIFIED FINANCIAL PLANNER™ Melissa explains when you should start your financial plan Cox, explains  

There aren't a lot of absolutes in this world. However, one steadfast absolute is that the earlier you begin financial planning, saving, and investing, the better. Early planning helps us create goals, benchmarks, and timelines with wiggle room. Plus, the longer you wait to start, the more expensive it will be to play catchup as you near retirement age.


Create an investment plan to achieve your goals

Some are reluctant to begin financial planning because they're worried about their goals, income, or whatever else might change, but that's not a problem! A great financial planner will work with you and adapt to your changing income and goals. The most crucial step is getting started!


If you're interested in discussing what your custom-tailored financial plan might look like, please call or email to schedule an appointment with me. We can create a financial plan that can fit into your budget and help you pave the road to your financial goals.


Schedule a call with Melissa Cox CFP®

Until next time...this is Melissa Making Cents!


Melissa Anne Cox, CERTIFIED FINANCIAL PLANNER™, is a College Planning and Student Loan Advisor and Financial Coach in Dallas, Texas.

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