A lot of people mistakenly assume that personal financial planning is only for the

rich. It is in fact, for everyone ‒ including recent college graduates, single

professionals, young married couples, single parents, mid-career married couples,
and senior corporate executives. Buying a home (Gitman, Joehnk, & Billingsley,
2014, p.7). Saving for college. Retirement planning. We all have financial goals, but
often have no idea how to make them happen. For members of the military, too often
these goals take a back seat to frequent deployments and PCS moves. Members
need a “financial roadmap” to chart out the best route to achieve their financial goals.
That’s where Financial Planning comes in. The following paper highlights why
financial planning is important for all the individuals irrespective of their field of
operations.
Financial planning is the process of setting, planning, achieving and reviewing your
life goals through the proper management of your finances. A holistic financial plan
not only involves investing money and building your wealth; but also your credit and
tax obligations, everyday spending, planning for a family, setting up your home,
saving for your children’s education fund, and saving for retirement – as well as
protecting yourself and your family with suitable insurance policies and arranging
your estate. All these facets of your financial plan are interconnected (Brigham, and
Ehrhardt, 2013).
Financial planning provides meaning and direction to your financial choices. By
clearly identifying and prioritizing your personal financial goals, you can better
understand how each financial decision impacts other areas of your finances.
Financial planning helps you understand your goals better in terms of why you need
to achieve these goals and how they impact other aspects of your life and finances.
Creating a financial plan helps you see the big picture and set long and short-term
life goals, a crucial step in mapping out your financial future. When you have a
financial plan, it's easier to make financial decisions and stay on track to meet your
goals (Irving, 2012). For instance, there are various international students studying in
universities in New Zealand, use of financial planning helps these students in better
understanding their financial needs. By developing a formal financial plan, these
students can better set their goals, and then plan targeted initiatives that can aid
them in attaining their financial goals in an appropriate an effective manner.
A key feature of financial planning is the identification of financial and lifestyle goals.
Goals are central to a sense of psychological well-being. Whether it be owning a
home, retiring at age 55, educating one’s children, saving enough to give some
away, living simply, living flamboyantly, learning to play a musical instrument. Goals
are also central to our experience of meaning in life and contribute to the process by
which we come to view our lives as worthwhile. Several authors argue that not all
goals are important or impart benefits to well-being, however. Only goals that are
connected in a positive way to the individual’s values and motivations present the
most benefit (MacLeod et al. 2008). The provision of best-practice financial planning
is likely to have positive influences on individuals’ well-being and life satisfaction.
While financial outcomes such as increased objective wealth play a role, the process
of financial planning itself is likely to be beneficial because it addresses client
lifestyle aspirations, values and goals (Irving, 2012). For instance, there are a large
number of sole proprietorships in New Zealand. The initiation and development of a
small business requires the owners to ensure that the they have the right resources
as well as the right market demand so as to make sure that the business becomes
successful in the long run. The use of financial planning helps the individuals in
allocating their resources in an effective manner and manage the cash flows
effectively. All of these work as compendium in enabling to attain their goals in an
effective manner, thereby adding to their overall satisfaction levels.
Financial planning can be considered to be the process of planning in the financial
domain and like a number of other domains in which planning takes place (e.g.
health), a range of mechanisms may operate to enhance well-being. Planning for the
future implies engagement with life tasks. Such engagement is an important element
of psychological well-being. Research suggests that planning for goals is associated
with a greater sense of control, which in turn is linked to increased perceptions of
well-being (MacLeod, Coates & Hetherton 2008). Planning reflects a desire to predict
or control one’s environment; while fulfilling one’s plans provides evidence of
competency and capability (Prenda & Lachman 2001). Ryff & Singer (2008) use the
term, environmental mastery, to describe a person’s ability to find or create a
surrounding environment that suits their personal needs and capacities. High
mastery individuals are adept at managing their environments and everyday affairs,
controlling a complex array of external activities, and making effective use of
surrounding opportunities. This sense of control or mastery over one’s life is linked to
improved mental health, including reduced anxiety and depression, and enhanced
life satisfaction and well-being (Nezlek 2001; Ryff & Singer 2008). According to
Prenda & Lachman (2001), planning for the future facilitates a sense of perceived
control that, in turn, enhances life satisfaction regardless of whether one is 25 or 74
years old. In their study, older participants were less likely to engage in future
planning, but when they did, their sense of control and life satisfaction were more
pronounced. Similarly, planning for retirement, through thinking about retirement and
attending planning meetings, has been found to positively correlate with retirement
satisfaction; independent of household characteristics or economic status (Elder &
Rudolph 1999).
 References

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Elder, H. W., & Rudolph, P. M. (1999). Does retirement planning affect the level of
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Irving, K. (2012). The financial life well-lived: Psychological benefits of financial
planning. Australasian Accounting Business & Finance Journal, 6(4), 47-59.
MacLeod, A. K., Coates, E., & Hetherton, J. (2008). Increasing well-being through
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