Why is Financial Planning Important for All?

Published by Sharekhan Education | April 9, 2021

Why is Financial Planning Important for All?

It issummer of 2021 and had it not been for this pandemic many individuals would have been on a summer vacation already; Right?Thinking of a vacation to your native or your favourite destination makes you want to just pack your bags andleave. But can you do that? Let us forget the pandemic for now and just focus on that dream vacation. Can you just think of a vacation pack your bags and leave?Definitely not! The reason is very simple. You need to plan don’t you? Where will you stay? How will you travel? How many days will you take leave from office? Do you have the money to spend etcetera… etcetera…

You need to get answers to all these and many other questions before you can actually start on your journey. An answer to these questions is just the beginning, and then comes the bookings; travel, hotel etc… the earlier you book, lower the price you get. So it is vital to pre-plan your vacation don’t you agree? Won’t this ensure that you enjoy a smooth and un-interrupted vacation?

If a simple vacation involves so much planning and detailing then just think how much planning is needed to ensure you achieve your financial objectives; like maybe buying a family car that fits all, a bigger and better house, your children’s education costs and even your retirement. All these goals need to be thoughtfully achieved. Can you send your son abroad to a foreign university if you have not planned for it or maybe live a comfortable retirement if you have not even invested for it?

The thought of missing these goals is rather scary. If I were to retire without knowing how much I would need as my living expenses I would maybe have to live off human kindness, depend on some relative to fund my retirement expenses. Would I really like that?

With the advent of nuclear families even parents are considered as a burden. Who then will care for you if not you yourself? So buckle up your shoes and start to plan. Planning your finances is the right way to achieve your goals. There’s a saying that goes ‘failing to plan is planning to fail’. If you don’t’ plan you could end up as described above. Are you willing to risk that?

So that brings us to the importance of financial planning but what is Financial Planning you ask and why is it important for all? Let me explain

Financial Planning is the process of achieving your life goals through the proper management of your finances. It helps you know where you are now, what you may need in the future and what you must do to reach your goals. It provides direction and meaning to your financial decisions.

Financial planning will help you quantify your goals; you will know how much you need and when. It will help you put in place the right asset allocation and select investments to match your risk tolerance and time to goal. In short it is your mantra to financial success. So if you plan right,you could avoid falling into un-wanted financial traps. Financial planning helps you build a systematic and a disciplined approach to meet your life’s goals. It is thus important for all; a24 year old who has just started his career ora 40 year old father of two or even a 60 year old retiree; everyone definitely needs financial planning.

With financial planning under their belt the 24 year old can buy his dream house or car; the 40 year old can send his children to the best of colleges while the 60 year old could have sufficient funds to meet his retirement needs and ensure that he does not outlive his retirement corpus.

A point to note here is that financial planning does not discriminate between genders; hence it is equally important for women too, toplan their financial goals. With a higher life expectancy and longer periods of unemployment like sabbatical or retirement; women too need to plan their finances early in life. Even a non-working woman needs financial planning in case of any inheritance to ensure that her inherited wealth is protected and utilized the right way.

To wrap it up we can say that financial planning is important and a must for all those who want to achieve financial success and meet their financial goals. But do keep in mind that financial planning is not a journey of a few days but many- many years requiring disciple and persistence. Are you game for it?

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