Financial Planning

Financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child’s education or planning for retirement. The financial planning process consists of six steps that help you take a holistic approach to assessing where you are financially. Using these steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals. The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans. Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you pay off your mortgage faster or it might delay your retirement significantly. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.
So, here comes financial planning which will help you to:
  • Define and Prioritize your financial goals;
  • Analyze where do you stand currently with respect to your current financial situation; and
  • Provide a clear road map of how to achieve your financial goals.
Some myths about Financial Planning
  • I am too young for Financial Planning: Just remember it’s never too early to start a good habit. Good habit here includes budgeting your expenses, defining your financial goals and start investing in the right financial products which can help you to achieve your goals. In fact, there is an advantage of Financial Planning at an early age; you can take the benefit of power of compounding on your investments because of longer investment horizon at your recourse.
  • Financial Planning is only for Wealthy Individuals: Financial Planning is not only for wealthy individuals but for you to become wealthy. It is for all those individuals who have aspirations and want to achieve them without a compromise. Financial Planning will bring the required discipline for you to be in sight of your financial goals.
  • Financial Plan is just another way to Sell me products: You are not wrong if you think this way; because all these years investment advisors or agents may have been just pushing you financial products on the pretext of ‘financial planning’. This indeed calls for caution while selecting an investment advisor or financial planner. You see, financial planning is challenging task and takes utmost pains and precision for a financial planner to design a financial plan, and which is why they charge a Fee. Remember, there aren’t any FREE lunches and that’s why, as any other professional fees to be paid.
  • Financial Planning is just about investments:Financial Planning is just not about tax planning or investments, but it is a more comprehensive exercise. It includes reviewing your existing investment portfolio, planning for your contingency requirement, planning for insurance requirement, planning for your financial goals, Asset Allocation, building an investment portfolio that suits your risk appetite and much more!