What is financial planning?
Financial planning is the process of documenting your current financial situation and setting future monetary goals. This process is utilized both by individuals and their families, and executives and their businesses. By considering financial assets, equity and liabilities one can get a clearer picture of both micro and macro activities necessary to achieve their goals.
REMINDER: Plans are not fixed, they are dynamic. As you advance in your financial journey, your plan might change according to the new data available.
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- How Small Business Owners Can Manage Their Accounting
Why is financial planning important?
Planning and logistics are essential to both businesses and individuals. Imagine driving to an event without a map or navigation tool… yeah it wouldn’t work out well. How do you expect to achieve your financial goals without any planning?
By writing specific goals, with deadlines and actionable steps, companies and individuals can experience both survival and growth. It helps reduce the risk of various decisions and ensure the longevity of both an individual’s cash flow and a business’s revenue.
Additionally, it can help the company adapt to changes in market trends that can be overcome with enough funds.
What are some examples of financial planning?
One example of a situation where you need financial planning is making a will. Creating an appropriate will is important to ensure your assets are left in the hands of people you trust.
Another example is setting aside a certain amount each month to be placed into a retirement fund such as a 401K or IRA.
Are financial planners the same as accountants?
Accountants and financial planners are sometimes interchanged in day-to-day usage as both specialists focus their attention on finance. However, they are different from each other and should not be mistaken for each other.
Accountants are detail-oriented and are good with numbers. Their role involves mostly auditing, financial forecasting, and compiling financial statements. Financial planners on the other handwork on the asset management side of things. A financial planner focuses their attention on budgeting, and investing, while an accountant focuses their attention on taxes, and finance structuring.
Should I hire a financial planner or accountant?
To answer this, consider your current financial situation. Are you looking for someone to help you invest and manage your money, or give you advice on how to reduce your tax liability? You could need one or the other, or, both!
If you own a business, own property, are writing a will, and or plan on making large acquisitions, an accountant might be right for you. Whereas if you trying to save for retirement or college you may want to consider reaching out to a financial planner.
Get Your Accounting Questions Answered by Accountants in El Paso, TX
If you’re looking for a reputable CPA firm in El Paso consider calling us at Marcus, Fairall, Bristol + Co., PLLC! We’ll answer any and all of your accounting-related questions. We offer our clients a variety of accounting services such as the following:
- Forensic Accounting
- Tax Problems and Resolution
- Tax Planning for Individuals
- Small Business Accounting
- Non-Profit Accounting
Marcus, Fairall, Bristol + Co., PLLC
230 Thunderbird Dr Ste G, El Paso, TX 79912
Phone: (915) 775-1040