Many of us dream of it, but only a few start financial planning for buying a house or purchasing a car or going on a vacation. The importance of a well laid out financial plan is often understood in times of strife. If the recent pandemic has taught us something, it is that health needs to be prioritised in a holistic manner, and that includes mental, physical, and financial health.
Let us go through some vital financial planning process steps in order to secure your financial future.
Ideally, financial planning needs to be goal-oriented, with due consideration given to the different faces and needs of life. Knowing the basic terms and concepts is a good way to start off the personal financial planning process.
This includes understanding your current income and expenses, estimating the future needs and setting up a plan to have cash available in hand for those unannounced rainy days.
Speaking of rainy days, investment planning helps you prepare for the various other milestones and goals in your life, ranging from buying a new car or a house to a memorable cruise on the high seas.
It helps alleviate the constant worry and scramble that people go through, especially during the end of each financial year, to save on taxes.
Provides cover for unforeseen health-related circumstances in life that can cost a bomb in treatment-related expenses. Not only health but insurance planning can also cover securing your home, vehicle, and other precious possessions.
Retirement is an important landmark in most people’s lives, yet a very few are properly prepared for it. Retirement planning helps ensure that you can maintain a good lifestyle and be financially independent in the future even after you quit work.
Many financial experts recommend the 6-step financial planning process as the ideal guideline to follow while aiming to plan your finances.
Investment platform PGIM’s Retirement Readiness Survey revealed some concerning statistics. It showed that 51% of Indians were unprepared for their retirement, with many of them not even having started financial planning for retirement. On the other hand, Urban Indians are saving and investing less while using 59% of their income to meet current expenses.
Planning now and starting soon is the key to making sure that you can meet the high cost of living in the future while being able to live a dignified life together with your family. Your future financial independence is a compelling enough reason to plan your future now.
Financial planning is crucial for securing a stable future. It encompasses various aspects such as liquidity, investments, taxes, insurance, and retirement. A 6-step process helps assess the current situation, determine goals, plan for contingencies, implement the plan, and monitor and revise as needed. Sadly, many individuals are unprepared for retirement, emphasizing the importance of starting financial planning early. Planning ahead can ensure a dignified and financially independent life for yourself and your family.
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Planning now and starting soon is the key to making sure you live a financially stable life. Planning for the future also helps you prepare for emergency situations and any unforeseen events that may impact you or your family.