Like HowStuffWorks on Facebook!

How Financial Planning Software Works


Planning for the Future

Let's look more closely at a common scenario where financial planning software often comes into play. Planning for retirement is really about playing the odds: You need to save X amount of money to get through X number of years.

Assuming a man retires at age 65, if he dies just 10 years later but he's developed a portfolio to keep himself in cash for the next 20 -- well, at least he was taken care of. On the flip side, that same man might have another 30 years to live, making those last 10 a real struggle. Throw in a spouse and the future grows even more difficult to foresee.

However, if you're the kind of person who sees the glass half full, you'll want to make sure enough money is there if you need it -- whatever you need it for. Personal financial planning software can help get you prepared. In a typical product, if you input your data, the software quickly generates reports that show your current money level and estimates whether you're on track to meet your future financial goals. You can tweak the data to find out what you'll need to change in order to get where you want to be, and read tips on how to accomplish that effort.

Pretty soon, you can develop a plan that'll have you prepared for those big ticket items you expect to purchase. You can also get on track to retire the way you'd like, whether you're dreaming of a cozy mountain chalet, a beachside bungalow, a chic uptown condominium or just the old family homestead if you feel like staying put.

On the next page are some links to lots more information that will help turn neophyte spenders into savvy investors.