In today’s fast paced life, is financial planning the key to a healthy and secure future? The author goes on to elaborate
Financial planning is a way to make sure you can reach your life goals by defining your relationship with your money well. You might want to buy a house, save money for your child’s education, or plan for your retirement or to pursue a dream you may have.
Financial planning is about taking control of your financial future and deciding where you want to be in 10 years or 20 years. By creating written financial plans, you will have specific targets and objectives that will help guide how you spend money now so that when it is time to retire or any other big event, you are financially prepared to do so. Let us understand the nuances and benefits of financial planning:
Helps you determine your short and long-term financial goals
It is essential to figure out what you want to achieve in the next few years. Do you want to buy a car? Do you want to travel abroad? Are there any major purchases that need to be made, such as buying a house or are you planning to start a family?
Each of the above questions has financial implications to it – and become your financial goals. Once these needs are identified, we can determine how much money will be required for each goal. It is also important that these goals are aligned with one another so that they don’t conflict with one another. This can help ensure that both short-term and long-term financial plans are being created simultaneously,
For example, a couple may decide together that they want their children to go to college abroad after high school, but they also want to pay off their home loan before that. Hence they need two separate portfolios for these two goals – even if fruition of those goals may be in the same year.
There is a lot more to Financial Planning!
It includes budgeting, investments, insurance, taxes, retirement, and estate planning, amongst other factors. Financial planning involves all the steps that you take to ensure that your life is in good financial order. It includes budgeting, investments, insurance, taxes, and retirement planning. Budgeting is tracking your income and expenses so that you know how much you have to spend each month on living expenses like rent or home loan EMI, as Financial planning is not just for the wealthy. It is for everyone. Even if you are starting with a small amount of money, you can still make smart decisions about how to use it and grow your wealth over time. You need to find the right financial partner who will not only help you set your financial goals but create a comprehensive map to help you at each stage well as personal items like groceries or entertainment items such as movies or going out with friends.
Investments are buying assets that are expected to increase in value over time, such as stocks, mutual funds or real estate. Insurance is a means of protecting yourself from financial loss; examples include health insurance and term insurance. Taxes are the amount of money that you pay to government entities.
Financial Planning will help you make sound financial decisions today to help you be more financially secure tomorrow.
Financial planning is not just about money. It’s about setting goals, creating a road-map, and then following through on your game plan. Achieving financial security takes time a long-term process that requires patience and perseverance.
Financial planning is not a one-time event; it’s an ongoing process of making decisions that affect your finances today and in the future. Your actions today will determine how successful your future will be, financially speaking.
Everyone’s life goals are different, but with smart planning, income levels are just one factor!
We have seen that financial planning aims to help you improve your finances by identifying how much money should be saved for various purposes, such as buying a house or saving for retirement.
In addition, it also focuses on reducing unnecessary expenses to ensure that a small amount of income can go a long way in meeting our day-to-day needs while still having enough money left over at the end of each month (or year) for the purpose of savings.
Conclusion
Financial planning is not just for the wealthy. It is for everyone. Even if you are starting with a small amount of money, you can still make smart decisions about how to use it and grow your wealth over time. You need to find the right financial partner who will not only help you set your financial goals but create a comprehensive map to help you at each stage.
To me, in summary, a healthy financial life is a result of five factors:
• Know your needs, wants and dreams –prioritise them into goals.
• Pursue a separate plan (read portfolio) for each goal.
• Start early. Invest regularly.
• Follow your asset allocation.
• Don’t let emotions come in the way of your investment discipline.
