Financial planning is a long-term process of managing your finances to achieve your goals and dreams. Some of those goals include:
- Purchasing a House/Vehicle
- Saving for your child's education
- Your child’s marriage
- Plan for retirement
How to Make Financial Planning Work for You?
- Set realistic goals – Always set realistic targets i.e. what is that you want to achieve and by when you want to achieve and wherever possible be quantitative. Good to dream of your goals but also to understand your ground reality.
- Understand Risk and Return – One needs to understand that in life there is never free lunch and the risk & return are interrelated. Hence, set reasonable objectives and do not expect high yield investments not to carry any additional risk, they usually do. And most of the people tend to underestimate the stress of a high-risk plan on its way down. So, it’s better be safe than sorry.
- Review Plans – Post plan implementation, periodic review is necessary. This is essential to adjust the plan according to the changing situation in one's life, financial situation and income levels (if any).
- Commence Early in Life - Financial Planning is for the elderly is a myth which many believe. But, it is essential to know that the earlier you start your financial planning, the better you will be in reaching your life's goals. In fact, it is advantageous to save small amounts of money at a younger age than to wait till one is much older to save large sums.
- Execute the Plan on Time - Financial planning is a perishable commodity. Speed and timeliness of execution make a millionaire and an average performer different. Hence, Financial Planning is a must.