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Financial Planning - Investment Management - Cash Management. What's the Difference?

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Aren’t Financial Planning, Investment Management, and Cash Management all the same thing? That's what some would have you think, but nothing can be further from the truth.  Understanding what you need and don't need is very important in your financial journey.  This is often complicated by salespeople trying to sell you what they believe you need, which is all too often the service that makes them the most money.

Let's start with a simple, yet important definition of what Financial Planning is.

Financial Planning is the Process of helping individuals meet their Life Goals through the proper management of their Financial Resources.

Notice that financial planning is a process, not a one-time event. You can also see from this simple definition that financial planning is all about achieving Your Life Goals. Everyone's goals are unique to them.  We all may have some similar goals, such as retiring with the lifestyle that we choose, but everyone is on their own individual journey through life.  

Financial Planning includes the following:

  • Cash Management / Planning 
  • Investment Management / Planning
  • Insurance (Risk Management) Planning
  • Retirement Planning
  • Education Planning
  • Tax Planning
  • Estate Planning

Financial Planning goes by several different names including wealth management, financial planner, financial advisor and retirement planning to name a few.

Investment Management

Most people think that Financial Planning is Investment Management but as you can see from above, Investment Management is a component of financial planning, just like retirement planning, tax planning, education planning, etc.  

Investment Management simply answers the question, "What do I do with my Investments?"  While this is a very important question on your financial journey, it’s just one of the things you need to think about.  The question you have to answer for yourself is, 

"Is Investment Management the most important component for me to begin my journey?"

Cash Management

Cash Management also goes by many different names including, money management, cash flow management, budget management, personal spending, personal finance, financial management, funds management and managing money, to name more than a few.

Cash Management  is about:

  • Understanding What it Costs to Be You
  • Understanding and Controlling how You Want to spend your money
  • An Awareness of how You actually spend your money

Notice that Cash Management Planning is also a component of comprehensive financial planning.  

At MLS Financial Planning, we believe, that all of the components of financial planning are important, but not everything has the same level of impact on everyone at the same stage of their financial life.  It’s about putting the most effort in the area that has the biggest impact, so you get the best outcome.  In our opinion, for most people, between 50% and 75% of their ability to become financially independent is driven by having a great cash management program with coaching. 

Sign up for a live, virtual presentation, to learn about our Cash Management Planning & Coaching Service.

Information presented on this site is for informational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any product or security. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here. The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. We make no representation as to the completeness or accuracy of information provided at these web sites.