Financial planning is an integral element of personal financial management. It is a strategic approach in which a financial planner helps people deal with various financial issues in areas such as cash flow management, investment planning, retirement planning, risk management etc. It involves the incorporation of myriad of financial resources and financial tools to achieve financial goals.
Who we are or how much we earn is of less concern as long as we can manage and plan our finances wisely.
Importance of Financial Planning: In order to reap long term benefits, it is important to plan finances with the help of financial planners and advisers. Some of the reasons why financial planning is important are stated below:
Increased cash flow: Financial Planning ensures proper flow of cash by undertaking measures such as tax planning, prudent spending and careful budgeting.
Income management: Financial planning facilitates management of income which helps in segregating it into tax payments and other monthly expenditures and savings.
Fulfil financial goals: By planning the finances, an individual can fulfil his or her aspirations which may include enrolling for an educational program, going for a vacation or savings for retirement.
Family security: From the point of view of family security, financial planning is crucial. Various policies available in the market serve the purpose of financially securing one’s family.
Standard of living: A proper financial plan ensures that one’s standard of living is not affected even in difficult times. For instance, death of the bread winner in a family or recession may affect the SOL if the financial plan is not in place.
Savings: Through planning, one can ensure financial security in the form of savings and investments.
Financial planning is just like your vacation planning. Financial planning provides the reassurance that your future it is worth all the effort.