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Have you ever wondered why financial planning is considered so important in the finance world? If you ever visited any financial advisor then you know how much emphasis is given on financial planning.
Everyone has a dream and aim in their life. We all do hard work to achieve our 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 our dream from our earning. We need to save and invest them in a planned manner. We all need Financial planning.
What is Financial Planning?
There is a lot of information available on the internet about financial planning but still many people are unaware of this. Many times, you read about it and you may have many complicated definitions. 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, financial planning is to save money and invest them to provide money for a child’s education. For some people, it could mean ensuring a steady secondary source of income.
Who require Financial Planning?
Financial Planning is about managing your finances to achieve your financial goals in 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 utility 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.
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 is not the case. It is more about saving the right amount so that future goals can be met. This is more imperative in a country where inflation remains high. This price eats into the value of your money. So Rs 100 may not have the same value tomorrow.
It is a well-known fact that the earlier you start saving and investing, the brighter your future will be. “The benefit of starting early cannot be overstated. Building discipline in the early years is crucial for long-term success,” says Sanjiv Singhal, Founder of Scripbox.