Heard of this old saying “By failing to plan, you are planning to fail?” Well, it also stands true for financial planning.
Every goal requires planning and execution. Even the most basic life goals such as renovating your house, taking a holiday, and maintaining a solid emergency fund need to be backed by proper financial planning and analysis.
What is financial planning?
Personal finance planning is a step-by-step approach to your life goals.
Why go for a Financial Plan?
We have to factor in inflation while planning our finances. Your goals only get more expensive with time. For example, keeping in mind the increased cost of education, you have to inflation-proof your child’s education fund. Or the cost of your international vacation for the anniversary. We also need to have an emergency fund to deal with a sudden loss of job and therefore, the income.
What does a good financial plan do?
Good financial planning, done early and wisely, will save you from the burden of unplanned expenses! A strong financial plan redirects your savings into suitable investment products, builds a corpus and prepares for any financial challenge life may throw at you.
How to make a good financial plan?
- Make a list of your needs and goals.
- Define your risk tolerance to determine suitable investment plans.
- Start investing as early as you can. The more time you give your investments, the better your chances of achieving your financial goals.
- Do the right asset allocation to channelize your savings into suitable investment options.
- Ensure appropriate savings to support or fund your financial goals.
- Execution and monitoring through timely reviews.
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