Financial Planning

Financial Planning is the process of identifying, planning and meeting Life Goals through proper management of Personal Finance. Life Goals differs from person to person but generally it includes saving for children’s education and marriage, going for a vacation abroad, planning for retirement, buying a dream home or car etc.

Financial planning is must for everyone. The crux of financial planning is investing for your goals and maintaining a fair amount of liquidity to make use of any opportunity that may present itself or meet any unforeseen emergencies.

The steps involved in a good financial planning are as under:

1. Determine the current financial situation.
2. Develop your financial goals.
3. Identify alternate course of action.
4. Evaluate Alternatives
5. Create and implement your financial action plan.
6. Review and revise the financial plan.

It is a step by step process to ensure that you plan and invest in a way so that you are constantly in sight of your goals and also the efforts required in achieving them.

A good Financial Planning will,

-          Brings discipline to our Personal Finances.

-          Helps in identifying the monetary requirement for different purposes and prioritizing them.

-          Converts requirements into specific needs, in terms of money and time.

-          Helps in identifying current financial position, net worth, net income and expenses.

-          Plans for savings and investments in a manner to achieve the predetermined goals.

-          Optimize returns and ensure risk management through adequate diversification considering the Risk – Return Profile.

-          Helps to beats the impact of Inflation.

-          Helps to maintain the standard of living even after retirement.

Hope the readers appreciate the importance of Financial Planning. A proper Financial Planning particularly at the beginning of one’s carrier will surely help them in achieving the financial goals soon.

Financial Planning may not be a standard template for all. It varies between persons to person and depends on one’s earning stream and expected wealth creation. The readers are advised to take the help of some financial planners so that the results are structured and more effective.