The concept of financial planning is complex and most likely misunderstood by most.

Essentially it can be broken down into four simple areas:
1. Debt Reduction
2. Wealth Creation
3. Wealth Management and Transfer
4. Asset Protection

A common misconception is that one needs to have money to invest to need a financial plan. NOT TRUE!

A financial plan is an essential tool to help anyone to find a way to change his or her financial circumstances – even if one is just starting out. The old premise that one must learn to save before learning to invest is true, but since so much of our lifestyle today can easily put us in debt, one should learn to manage and minimise debt as early as possible.

However with homes, cars and education costing so much, many are in a high level of debt early in their careers. It may seem that the first step in planning for wealth creation should be eradicating this burden, but it is not.

The first step in planning for wealth creation is to protect the most valuable assets against sudden misfortune.

Ask yourself this: How long can you survive financially if you are unable to work?

At what point would you be forced (by the banks or your own prudence) to sell your car, or to downgrade your home?

And if you were forced to sell, would you get the best price for your property? Would you be able to pay out the loan?

What if the main income-earner in your family were to pass away? Would the family’s lifestyle be affected? Would they need to sell the family property?

Most people would honestly admit that they would have to compromise their present lifestyle when faced with a death in the family.

This is where financial planning can create a strong foundation because there are ways to protect against this. The disability income insurance, critical illness insurance and life policies can be used to provide an income stream or a lump sum in the event of an unforeseen and sudden misfortune. This can ensure that you do not need to dispose of your property in a hurry, if at all.

Asset protection can provide you with peace of mind and is the first step towards financial freedom. See your financial planner and take the time to put a strong foundation in place.