Why Financial Planning Is Important

Over the last couple of years, we frequently heard terms like financial planning, personal finance, investment management, retirement planning which have emerged as buzzwords of sorts. Newspapers, blogs, magazines, tv channels and just about every one under the sun seem to be talking about the importance of financial planning. So what is financial planning more importantly, why it is so important?

In easy words, Financial Planning (FP) is the procedure of meeting your life objectives via the proper management of your finances. The process of financial planning should help you answer concerns such as Exactly where you are these days, that is, your present personal balance sheet, exactly where do you want to be tomorrow, that is, finances linked to your objectives, and what you should do to get there, that is, what you must do to reach your objectives.

The process involves gathering relevant financial information, setting life objectives( such as children education, buying home, purchasing car) examining your current financial status and coming up with a technique or plan for how you can meet your goals given your present situation and future plans.

Creating a financial plan needs a consideration of numerous elements. This consists of client's current financial status, their financial objectives, any outstanding loan, investment instruments, insurance requirement, retirement corpus, inflation, risk profile, tax liability etc.

FP provides you with a technique for organizing your financial future, so you can plan for the unforeseen. Organizing your finances empowers you to be independent and handle unpredictable events in your life. Effective personal financial planning is essential for anyone who wishes to manage financial difficulties and accumulate wealth.

Coming to our primary subject i.e. why it is important. Let us understand one by one.

1. It assists in increasing cash flow as well as monitoring the spending pattern. The cash flow is increased by undertaking measures such as tax planning, prudent spending and careful budgeting.

2. A correct financial estimate/plan that considers the earnings and expenditure of a person, assists in choosing the correct investment policy. It enables the individual to attain the set goals.

3. It assists gaining an understanding about the present financial position. Adjustments in an investment plan or evaluating a retirement scheme becomes simple for an person with financial understanding.

4. Providing for your family's financial safety is an important component of the FP procedure. Having the correct insurance coverage and policies in location can provide peace of mind for you and your loved ones.

5. It assists you to attain financial freedom.

6. To meet financial goals and obligation.

Financial Advisor/Planning: Whether you already have a financial advisor or are now looking to hire one, you want someone who has your best financial interest at heart. Comprehensive financial planning for an individual or couple generally involves tax planning, risk management, investment planning, retirement planning and gift and estate planning. We help clients create a financial plan that aligns with their life goals and we can help you too.

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