Do we really need a financial plan?
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It is often said that to fail to plan is to plan for failure. These words couldn’t have been truer when it comes to saving and investing. Today, revenue generation is happening, but the age-old problem of giving proper direction through a well-defined financial plan still plagues most earners. The 9-to-9 job for six days a week and the associated commuting leaves people with little time to think beyond the mundane. As a result, their financial plan becomes like a prescription after contracting an illness. In fact, it should be a vaccine taken long before. A good financial plan is essential for a secure future. Today’s generation suffers from a unique problem – longevity risk. Chances are we will all live well beyond the 70s, but do we have the income today and tomorrow that will allow us to be financially independent? A financial plan can take care of your today, tomorrow and future. Let’s understand how.
1. Achieve goals – Basic financial planning helps you determine your short- and long-term financial goals, then creates a balanced path to achieving those goals. It cannot be done alone. Just like at the gym, a financial plan is incomplete without an expert financial advisor. Like a gym instructor, a qualified financial advisor will get you where you want to be.
2. Revenue Management – A financial plan is a dynamic system. It allows you to manage your income more efficiently through planning. If you manage your income well, it’s easy to figure out how much money will be needed for tax payments, other monthly expenses, and for savings.
3. Track cash flow – Many people think they earn Rs 1 lakh but don’t really have a clear idea where the money goes. With a financial plan, you can track your cash flow. This will be done with careful monitoring of your spending habits and expenses. Throughout the year, you’ll be able to do tax planning, engage in prudent spending, and smart budgeting so your hard-earned money is put to the best use.
4. calm capital – An increase in cash always leads to an increase in capital. This is a great boost for your investments. With more capital, you are considering additional investments to improve your overall financial well-being. A well-defined financial plan will give you options for reviewing capital, especially after a surge.
5. Family first – Our financial well-being is incomplete without our family. So, no financial plan is acceptable without taking care of your family for life. Having the right insurance coverage and policies in place can provide great peace of mind for you and your loved ones. This allows you to breathe easy and confirm that your existence or lack thereof will not harm your family’s financial future.
6. Interesting investments – When done correctly, financial planning takes into account your situation, goals and risk tolerance to establish an investment plan. It’s like a guide that helps you choose the right types of investments that are right for you. Everyone is unique. Thus, all financial plans should be unique to suit needs, personality, and goals.
seven. Quality of life – There is no financial plan that can make your night rich. But, if you’re not careful, your standard of living can turn your poor into rich within a few years. Large, steady income can make you feel like the good times are rolling. But the savings achieved through good planning can pay off in good times and bad. Thus, a financial plan always helps you to respect your standard of living.
8. Financial understanding – What every financial planner and every financial plan does is provide a better financial understanding of your past, present and future. If you’re looking to the future, a well-defined financial plan can help you achieve measurable financial goals. You can easily understand what the financial plan has achieved and what you would do without a financial plan. This gives a whole new level of understanding of your finances, which leads to budget control and lifestyle management.
9. ace trumps – A plan is only as good as the assets. Financial plans help you build assets. But assets can be liabilities at first. Thus, a financial plan will help you determine if the asset is really worth it. This knowledge can help you make a good decision and prepare for the future to avoid unnecessary burdens in the future.
ten. Saving skill – Saving for a rainy day and for days when it does not rain is important. Drastic financial changes can upset you if you don’t have a plan. A financial plan helps you divide your money into high, medium, and low liquidity options based on your goals and appetite. This allows you to use some of them in an emergency or use them automatically to achieve an objective depending on the design.
Conclusion – A financial plan will help shape your financial future in a way that is essential to achieving your goals. This should be done in consultation and in association with your financial adviser. Each financial plan should be tailored to your needs and therefore it is important that an accurate and comprehensive assessment of your current financial situation is carried out. It’s like buying a car – you can’t change the car after you buy it. It is therefore important that a well-defined financial plan be developed knowing what is good and suitable for you.