Life is unpredictable, any untoward incident can happen at any moment and you may need money urgently. In essence, a proper financial plan makes things smoother. Financial planning includes estate planning, which means the smooth distribution of your wealth after your death. Takes care of the estateĪ financial plan will guide those taking care of your finances to manage your estate efficiently. You will be aware of when your investments will give returns and how and when you will achieve your goals. This eventually gives you peace of mind because then only you will be able to get a clear picture of your future finances. Manage inflationįinancial planning helps you manage inflation by planning your budget in a better way. This means having enough cash reserves for medical expenses and other emergencies.Ī proper financial plan will have your retirement goals listed, including your income and expenses as detailed as possible. Relaxed retirement life is possible only if your finances are in a healthy state and are in order. So you can plan your finances accordingly in such a manner that you pay the least amount as tax legally. This will help you maintain a balanced investment portfolio at all times.Ī sound financial plan will also help you assess your tax obligations at the beginning of a financial year. It is essential to have a financial plan for choosing investments in line with your income, risk capacity, and goals. This will help you understand how much you need to save to reach your goals. Planning your finances will keep a check on your expenses and help you make savings.Īs you will have a budget ready, you can easily assess whether you are overspending or are within budget. We need money for our basic needs but occasionally tend to splurge on unnecessary luxuries. Helps manage incomeĪ good financial plan helps you manage your income better. The following points will help you understand the importance of financial planning 1. You cut on unnecessary expenses and start saving. It helps you set short-term and long-term goals in life and helps you make financial decisions more easily.įinancial planning instills discipline in terms of managing your money. Recommended Read: Difference Between Financial Planning & Wealth Management Importance of Financial Planningįinancial planning plays an important role in giving direction to your goals. The specific advantages of personal financial planning include greater effectiveness in obtaining, using, and protecting your financial resources throughout your life. You will be able to control your financial situation by following such a planning process.Įvery individual, family, and household has a unique financial position and all financial activities must be meticulously planned to meet specific needs and goals.Ī comprehensive financial plan enhances the quality of life and increases your satisfaction as it does away with all uncertainties about your future needs and resources. For that, you need to have proper financial planning and investments to achieve the goal.įinancial planning can also be defined as the process of managing your money to achieve personal financial satisfaction. 25 Lakh for your daughter’s college education by the time she turns 18.
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