A financial planning resource, often provided by a financial expert, helps individuals determine their current financial standing. This typically involves calculating net worth, assessing income and expenses, and projecting future financial needs. An example would be a tool that allows users to input their assets, liabilities, income, and expenses to receive an overview of their financial health.
Understanding one’s financial position is crucial for effective financial management. It allows individuals to set realistic financial goals, make informed investment decisions, and plan for major life events such as retirement or homeownership. Historically, access to such resources was often limited to those who could afford professional financial advisors. However, with the rise of digital tools and increased financial literacy initiatives, these resources are becoming more accessible, empowering a wider range of individuals to take control of their financial well-being.