Financial planning has always been a part of your daily life, but you may not have always realized it. When you've made decisions about what kind and how much insurance to buy for your car and your home, you've been doing personal financial planning. When you contemplate the tax implications of a purchase, that too is a form of financial planning. And of course, the way you manage your income and your spending is clearly financial planning.

Your finances affect virtually every aspect of your life. Choices you make in one area affect the choices that are available in others. Realizing this and creating an easy-to-follow plan around each process is an important part of reaching your goals.

Keep It Simple

Maybe you've put off financial planning for fear of what you'll discover about yourself and your finances. Or you may have been scared off by the idea of complex cash tracking systems or detailed daily spending diaries. But by ignoring your money, you miss investment opportunities or make mistakes that financial planning could help you avoid.

Getting in touch with your finances and creating a simple plan for staying in control is the best way to keep your money working for you, not against you. You're about to learn which methods are right for you — and which to run away from! Let your financial planning process be as individual as you are.

Think Holistically

Most people think of financial planning as merely starting a retirement account or creating a budget, but it's a lot more than that. In fact, financial planning really touches almost every part of your life — and it connects almost every part of your life.

What you're spending on now affects the ability to acquire things you may want to spend on later. How you feel about your money affects your overall stress level, and therefore your health and your relationships. Whether you've planned for college costs or for life insurance or emergencies affects your security when large or unexpected expenses arise.

You probably think you have an intuitive feeling about how secure your finances are. Creating a financial plan or reviewing your personal finances regularly either confirms this intuition and gives you the chance to plan ahead and get the most out of what you have or provides an opportunity to take corrective action right away.

Parts of Your Plan

Your financial plan covers seven general areas:

• Goal setting

• Managing your cash and your budget

• Risk management and insurance

• Tax planning

• Investing

• Retirement or planning for a job transition

• Planning for what happens when you're sick or when you're gone

Once you've created your plan and filled in the missing pieces, you can come back and review individual areas separately. Remember, your plan will always be changing. You make a plan, set a course, and, like a ship navigating across an ocean, you adjust your course as the currents change.