We all have certain aspirations. While a plush house in a posh suburb maybe one individual’s cherished dream another individual maybe yearning for the latest luxury car, a destination wedding or an exotic foreign vacation. The aspirations may vary from person to person but there is a common thread that binds all of them- the need for money to fund these dreams. Without an adequate corpus these dreams cannot be transformed into reality. And to build a corpus you need to adopt a disciplined approach while investing. A sound financial plan will help you maintain the required discipline. Benefits of financial planning: A good financial plan thoroughly analyses your revenue streams, expenses and spending habits. This enables you to better understand your income and cash flows. On the basis of this analysis, you can create a tailor made plan to suit your requirements and circumstances.
Sound planning will enable you to meet your current and future expenses without adversely affecting your standard of living. A good budget will allow you to save more in the long run and thus ensure you have a sufficient corpus when you retire.
There are a variety of investments in the financial market to cater to diverse needs. An appropriate financial plan will help you select the most suitable types of investments taking into account your needs, goals and obligations. A good plan will ensure you have adequate liquid investments to cater to any emergency. Planning also involves determining which liabilities should be paid off first. For example credit card debt should be settled at the earliest as it carries a very high rate of interest. In contrast home loans would be paid off over a much longer time period (twenty years) as they involve large sums of money albeit at a lower rate of interest.
A sound financial plan will ensure you have adequate insurance cover to secure your family’s financial security as well as have enough funds to meet your tax liabilities.
Financial planning enables you to set realistic goals which can be measured and achieved over a specific period of time. This will help you understand and take charge of your own finances in a systematic manner.
If you do not have the requisite skills and knowledge to create a plan you can always seek the help of a financial advisor who can design a bespoke comprehensive plan based upon your circumstances. It is imperative that you have faith in your advisor and reveal the correct details about your liabilities and income streams. Otherwise no amount of planning can help you achieve your dreams.