Financial Planning is the first step to credit worthiness because it establishes your ability to repay debt. Debt is a monetary obligation one creates for receiving a product or a service. The amount one should agree to pay should not exceed a reasonable amount of their income.

Insurances should also be part of your financial planning, because with proper insurance planning you can protect your assets and preserve them for your family. This type of insurance planning is known as Estate Planning, it creates income at the time it's needed the most. Believe it or not, with death comes debt! Estate planning can not comfort you emotionally but, it can relieve the financial burden families have to cope with due to death.

It's more likely however; that a disability will cause a financial set back and because of that, Income Replacement Insurance should also be part of your financial planning. Income Replacement, also known as Disability Income will replace income lost due to sickness or injury, this is important for those who are self-employed and in some cases for those who are employed. Employees are covered under workmen's compensation but in most cases you are only covered for on the job injuries and only for a limited period of time. That is why you should include Income Replacement Insurance in your financial planning.

Retirement Planning is your anchor to a well prepared financial plan; no one wants to work forever. Planning for your retirement should start the first day you start working. Notice I did not say when you get a job. As soon as you start receiving money you should start a savings account. If you are on a job that offers an employer sponsored retirement plan join it and contribute up to the maximum that your employer matches. Financial Planning is a process of combining your income with your need to meet debt and the need to either replace or provide income for your family as well as for your retirement.