Why Financial Planning Is Essential In Every Household?

Planning is being the future into the present "Being a financial planner allows you to build the work life balance that you want". Financial planning is not about what you earn but how efficiently you manage the money that you earn, keeping your long term goals in mind. Financial planning is specially works in middle class families like us to manage the amount of money in there present and future , planning for utilizing them properly. A financial plan acts as a guide as you go through life’s journey.

For example, if you want to build up a corpus of Rs. 10 lakh for your daughter’s college education through investments, you need to grow this amount by the time she turns 18. Not a year later. This is where financial planning becomes essential.

There are numerous practical benefits to financial planning it helps you to increase your savings, enjoy a better standard of living, be prepared for emergency, attain peace of mind and many more. It may be possible to save money without having a financial plan. But it may not be the most efficient way to go about it. When you create a financial plan, you get a good deal of insight into your income and expenses. You can track and cut down your costs consciously. This automatically increases your savings in the long run.

Most people assume that they would have to sacrifice their standard of living if their monthly bills and EMI repayments are to be addressed. On the contrary, with a good financial plan, you would not need to compromise your lifestyle. It is possible to achieve your goals while living in relative comfort. With adequate funds at hand, you can cover your monthly expenses, invest for your future goals and splurge a little for yourself and your family, without worry. Financial planning helps you manage your money efficiently and enjoy peace of mind. Don’t worry if you have not yet reached this stage. If you are on the path of financial planning, the destination of financial peace is not very far away.

The importance of personal financial planning in India cannot be ignored. It is not just about increasing your savings and reducing your expenses. Financial planning is a lot more than that. This includes achieving your future goals, such as wealth creation, retirement planning, child’s education, saving tax, etc. The rise in the price of everyday items means that if you want to maintain or increase your current standard of living in the future, you need to create a sufficient corpus of wealth. You may also want to purchase a better car or a new house in the future. All this requires money, and it merely highlights the importance of wealth creation. It is possible to achieve these goals by carefully investing your money in the right avenues. Equity mutual funds can be a suitable option for long term goals. These funds could help the investor to accumulate wealth in the long run. Your retirement may be 25 or 30 years in the future. But that does not mean you plan for it when you retire. To enjoy a happy and comfortable retired life, you need to start building your safety net right now.

Planning at an early stage in life can help secure your future against financial uncertainties. Also, you invest lesser amounts if you start early and gain from the power of compounding which helps to build a large enough corpus over the 25-30 year period.. The Indian Income Tax Act provides various provisions for people to reduce their tax outgo. By planning your taxes in advance, you can identify the best avenues to invest your money and reduce your taxable income. Mutual funds provide a tax efficient avenue for investing for your life goals.

You can create your successful planned by understanding your current financial situation. This is the first step in financial planning, as it gives you a good sense on the state of your finances and ways to improve. The next step is Ask yourself: ‘what are the different financial goals I wish to achieve in life?’ Write them on a piece of paper. Don’t hesitate to put down any goal because no goal is too small or too big. Then look the numerous plans and decide which is suitable for you. When it comes to investing, many financial experts have highlighted the importance of mutual funds.

Investing in these funds consistently over a longer period can help you achieve your dreams and goals. Then it comes on implementing the right plan. You need to select the right investment option based on factors such as your goals, age, risk appetite and investment amount. If you are unsure on the funds you need to select for your portfolio, you can avail the services of a financial advisor. These are certified professionals who help investors make the right investment choices. Then you need to monitor it properly .

"Financial freedom is available to those who learn about it, and work for it".