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Financial planning is the long-term process of wisely managing your finances to achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life. Financial Planning is important because it helps you to understand your life goals which involve money such as buying a home or car, investing, saving, and retirement planning. By understanding the financial planning process, it gives you a greater sense of financial security, especially in this uncertain economic downturn.
We at wealthbasket.co assist you to build, implement, monitor, and achieving your Financial Goals systematically with ease, after conducting a thorough Risk profiling. Ex: investment advisory services, tax Planning, Family Education
Evaluate your current financial situation by compiling a personal cash flow statement to estimate your personal net worth. The simple formula is:
Your income(salary, bonus, investment income) – Your expenses(tax, outstanding credit card payment, personal loan) = Personal net worth
If your personal net worth is positive, congratulations to you as you are on the way to achieving financial freedom. However, if the result is negative, please sit down and review again your financial plan properly. Trying to develop good financial planning habits such as learning money-saving tips to get you out of the valley of debt. Please be honest with yourself while evaluating your personal net worth as it’s really important to develop your long-term financial goals.
By now you should be able to develop some financial goals after knowing your personal net worth. Most people have a few goals, some short-term and others long-term. For example, “I want to retire earlier at age 45 with a personal net worth of Rs.5 Crores.” It’s fine to have a few goals but you need to prioritize which goal to achieve first before moving to the second goal. If you are uncertain of which goal to achieve first, kindly consult with a financial planner who can help you to discover your own values and make it easier for you to prioritize the goals.
Draft a financial plan with details of plans and strategies on how to achieve your goals. Please be specific on your plans and strategies, Let’s take an example below:
Plan – Buying a house in 3 years from now. Strategy – save money
Do you see what’s the major problem with the above strategy? By mentioning saving money only is a failed strategy, you need to mention how much money you’re going to save every day, week, monthly, and also identify how you going to achieve it. All these details will help a lot in your financial planning process.
Actions speak louder than words. It’s useless if you do not take action to achieve your planned financial goals. I assume that you have decided on the best plan for your goals and what you need to do now is to implement plans and strategies. It needs your perseverance and discipline to manage financial plans. You can always seek assistance from a financial planner to reach your life goals.
This is the last and most important step in the financial planning process. You should monitor your progress as time goes by to see if any changes need to be made in order to achieve your primary financial goal – Financial Freedom.
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