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Have you ever wondered why financial planning is considered so important in the finance world? Every financial advisor emphasize on it.
Everyone features a dream and aim in their life. We all do hard work to achieve that dream. For some people, buying a new car is a dream, some people want to purchase a dream house and so on.
Have you ever wonder is it possible without money? More than money, it needs planning. Our dream is unlimited but our earning is limited. So, it is not possible to fulfill all our dream from our earning only.
What is Financial Planning?
There are tons of data available on the web about it but still many of us are unaware of this.
If I define it in simple language, then “Financial Planning is the process of meeting your dream/goals through the proper management of your finance.”
Financial planning is not the same for every people. This is because the end goal may differ. For some people it means planning for retirement and others, it means planning for vacation. For some people, it means to save money and invest them to provide money for their child’s education. For some people, it could mean ensuring a gentle secondary source of income.
Who Require Financial Planning?
Financial Planning is about managing your finances to realize your financial goals within the most optimum manner. It’s not about making huge saving or less spending nor does it mean having lots of money for making investments. It is about prioritizing goals and achieving them most efficiently to derive maximum benefits out of your decisions. For this reason, almost everyone requires financial planning.
Whoever has financial goals and wants to achieve them most efficiently requires financial planning. It does not matter how much you earn or what is your age is.
Only saving money is not enough.
You have to invest them in the right financial instruments to let them grow. People often have a misconception that financial planning is about saving more and spending less, but that’s not the case.
It is more about saving the proper amount so that future goals are often met. Keeping money in saving account decrease the value of your money. The return in saving account is much lower than the rate of inflation. So, Rs 100 might not have an equivalent value tomorrow.
So, it is always advisable to invest your surplus funds in a disciplined manner. If you are young then this habit will result in a huge benefit in future. Start investing early in your life will make help you to create long-term wealth.