What Is Financial Planning?

Think about the last time you took a big road trip. Rather than hop in the car and wing it from point A to point B, you probably mapped out the best route first; found hotels and scenic points along the way; and planned a backup route in case a traffic jam or stormy weather knocked you off course.

Financial planning is a bit like preparing for that trip—except point A is where you stand with your finances today, and point B is the future you who has accomplished your goals with the help of smart money decisions. You may have to make detours along the way—because life has a way of throwing us curveballs—but financial planning gives you flexibility so that you’re ready for whatever life has in store.

What is financial planning for?

Whether you see yourself traveling the world in retirement or buying the dream home where you’ll raise your family, financial planning is tailored to you based on your goals and priorities. Some common financial planning goals people plan for include:

• Getting married, which can include combining finances or planning as a couple

• Buying your first home (or buying a second home or third home)

• Growing your family and planning for costs of raising a child

• Paying off debt

• Creating college savings plans to send kids to college

• Starting a business

• Determining how much you need to live your dream retirement

• Creating an estate plan that will protect your family should something happen to you

• Creating a will or trust to pass assets on to your children

Creating a financial plan will help you identify which financial goals are most important to you and will help you create a financial roadmap to reach them.

What is a financial plan?

A financial plan looks at your entire financial picture and breaks down what you’d need to do in order to meet your goals, taking into consideration all your financial obligations. And when the unexpected throws a wrench into things, your financial plan can help you recalibrate, sort of like a GPS for your money. A financial plan can include:

• How much you should put toward your retirement nest egg

• How much to maintain in an emergency fund

• How much you should put toward big and small savings goals, whether it’s buying a new car, planning a family vacation or funding future college tuition

• Advice on which savings and investment vehicles can help you reach your goals, and how to manage your portfolio according to your needs

• The types of solutions that can help protect your family, your income and your assets, or help cover future needs like long-term care

• How to pay down debt, like your credit card balances or student loans

• A budget that shows how your income can be used to cover your expenses and goal contributions—while making sure you can still have fun

• An estate plan that will help ensure the wishes for your family and assets are carried out after your death

Putting together your financial plan

You can put together a financial plan with the help of a qualified financial advisor, who can help you prioritize your goals and offer advice on how to achieve them. Your financial advisor can also connect you with other professionals, such as tax or estate planning advisors, for those areas of your finances that require very specialized knowledge.

At Northwestern Mutual, creating your financial plan will start with a conversation. Your advisor will ask questions to get to know you and which goals are most important to you. From there, your advisor will make recommendations on things like how much to save (and how you’ll save), what financial vehicles make the most sense for you and additional financial products you may want to consider adding to your portfolio.

Once you’ve solidified your plan, implementing it is really where the rubber meets the road. But remember that as your life changes, so will your financial plan. So, you’ll want to meet regularly with your financial advisor to check in and adjust as needed.

Life is a journey that can have many twists and turns, and financial planning with a Northwestern Mutual financial advisor can help you prepare for them—and make sure that your money helps, rather than hinders, meeting the dreams you have for you and your family.