Financial Planning is the process to build a specific financial plan to reach your goals, by considering your financial situation. It often digs into multiple areas of finance, like investing, savings, retirement, insurance, taxes, and much more.
Financial planning is the process of estimating the capital requirement, to meet one’s life goals. It is holistic and broad and includes a variety of services rather than focusing on a single aspect of your finances. A financial plan guides us through life’s journey. It essentially helps you to be in control of your income, expenses, and investments in a manner that you can manage your money and achieve your goals. It involves clients’ entire financial picture and advises them on how to achieve their short and long-term financial goals, right from saving for education and planning for retirement to effectively managing taxes, insurance, a valuable relationship is developed by the financial planners to have more secure tomorrow.
The following are the key features of financial planning which are important for firms and individuals.
There are several practical benefits of financial planning.
Personal finance becomes the focus when the responsibilities grow. At this point, the financial plan helps to evaluate the overall person’s current income and future earnings. It allows you to manage your money efficiently and make wise financial decisions.
A financial plan offers direction and gives meaning to your financial decision. It permits you to understand how each financial decision that you make affects other areas of your finances. You can easily adapt to the changes that life brings and feel more secure that your goals are on track.
The child’s education plan should be bought as soon as the child is born. To meet the financial contingencies that may arise due to the surging cost of education.
A financial planner that works for you should be loyal to you. He should give the best advice to the client and create customized financial plans designed to provide income and growth for clients.
Determine the expenses of every month, like rent, loan repayments, the variable items like food, clothing, etc. Create a budget. Use your tact to contain these variable expenses to start saving.
The income level varies with age so it is difficult to apply a rule of thumb toward savings. Ten percent is a good start for savings. Start putting a little aside every month and then slowly you can increase it.