Has anyone ever asked you what your definition of financial planning is?
There is no right or wrong answer. In fact, I think I’ll pose this question on FiLife.com and see what we get. Feel free to share your definition or your thoughts in the comments below as well. In the meantime, I’ll share my definition with you.
For me, financial planning is maximizing choice and minimizing risk and loss.
Maximizing Choice – the fun things in life
- Retirement
- Education
- Vacation
- Other funding goals (new home, second house, new car, etc.)
Minimizing Risk & Loss – the things people don’t like to talk about and we can’t control
- Taxes
- Inflation
- the Economy
- Death
- Disability
- Long Term Illness
What do you think of my definition? How does it vary from your own?
{ 4 comments… read them below or add one }
Sounds like a spot on definition to me!
I would add “Allowing your dependents to live freely in case of death” or something morbid like that.
I really like that definition. It seems pretty simple and straight forward!
For me Financial Planning is:
1. Setting a goal
2. Making rules for achieving that goal
3. Obeying the rules to achieve that goal
4. Breaking the rules when a better goal is coming
Thanks for posting this article.
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Your definition is very straightforward. Maximizing choice and minimizing risk and loss is really what financial planning is all about. Maximizing choice is all about opening up options for jobs for me, as in getting more education and training. Whatever your financial planning goals, I think it will always come down to maximizing choice in the end.
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