You may have heard a phrase called Financial Plan. In financial Planning world, this is the ‘most’ important word that every financial planner wants client to understand and advises to everyone.
In fact he/she studies whole financial planning books for this once phrase only, called a Financial Plan.
So let’s understand, what exactly Financial Plan is and is it worth having a Financial Plan?
Is it really required or is it just a gimmick of Financial Planners, who wants to sell Financial Plan just to earn money or show how important, his advice is for you.
Let’s understand with an example, and then we will talk about the benefits:
Mr. Sunil Gupta wants to go to Kerala with his family in these summer vacations, so he tried with many trip advisors, searched net for different mode of commutation, how much time will it take, how much money will be spent and so on.
After finalizing which transport they will opt for, they looked for good hotels, with good facilities etc. and checked pricing for all. Finally they went to their destination and came back happily.
Can you figure it out, that why the destination was so happy?
Not because the ambiance was very beautiful
- But Because
- they have planned it well
- They have chosen the right transportation mode for them,
- Right hotel to stay in
- Right site seeing (as per their needs and requirements)
- They planned in well advance.
The Financial Plan does same work here in financial investment world.
I know, you must be thinking that day to day life is already so complicated, then why to add this additional burden of Financial Plan on yourself.
Believe me; this will solve your all financial worries, instead of further complicating it.
A Financial Plan in hand will always ease your way to achieve what you wished all through your life. Some people are fortunate that whatever amount of money they waste, still they get what they wanted in their life.
This is not true with everyone. So have a Financial Plan & make it happen for you also
Let’s have a look, what does a Financial Plan do for you.
- Strongly suggests you to set aside money for contingency
- tells you about your current financial position (net worth)
- Gives you an idea from where can you reduce your expenses, if required
- Gives you an idea of your future cash flow and expenses
- How much you can invest easily
- Which financial products not suitable for you as per your life goals and returns parameter
- Tells you about your existing insurance policies and associated legalities associated with it
- Briefs you about your exact insurance need
- Make you debt free by prepaying a loan or reducing its amount, if feasible
- Ascertain your life goals such as higher education of kids, marriage, your retirement, purchase of car, vacation abroad and domestic vacations or any other life goals
- How much amount will be required in future for each life goal?
- For each life goal how much amount need to be investedand where you should invest this money
- Makes a provision for contingency fund and this fund earning good return for you
- Warns you for less fruitful investments, which are eating your money
- Makes you invest in tax efficient investment, so that you do not lose money on account of taxation unnecessarily.
- In nutshell gives you complete financial picture to you and tells you how to come out of the situation
- Financial Plan gives you a road map to reach your destination in shortest possible route.
Reading all this, you must be wondering, would it had been better if you have known this before.
Then I must say, it is never too late.
Here idiom suits you (in Hindi )
“देर आये दुरुस्त आये”
Financial Planning or Financial Plan is it a new world gimmick
But actually it is old wisdom which has come in a new wrapper.
In our childhood days, you must have heard from our grannies, that this particular thing I have kept for my daughter or grandson/granddaughter.
They used to save some money and keep it aside for future family requirement.
They had the vision that money will be required in future, which everybody knows in today’s world also.
Why is Financial Plan needed
- Increasing complexity of financial products and newer terms and laws make it difficult to understand financial products. Due to misspelling or ignorance play a vital role and people invest in wrong investment product for them.
- Time plays crucial factor to understand Financial Investment. Hectic work schedules, makes it further difficult to review portfolio on regular basis.
So a Financial Plan and its regular review will help you a lot in due course of your life.
- Investing in wrong investment products ( as per your need ) and later repenting it will cause chaos in day to day life. You get less; while investing more or not getting anything at all.
- Other time we do not know how much money will be required in future for a particular life goal,
- When we do not know the amount, achieving that financial goal is remote.
A Financial Plan does all for you.
Gives you an insight
Gives answer to your financial queries.
तो अगर चाहिए है चैन की नींद, तो सोइए नहीं जाग जाइये
निवेश करने से पहले जान जाइये
कितना चाहिए , कब चाहिए और किस लिए चाहिए
ये पहचान जाइये
सब सवाल के जवाब एक साथ,एक फाइनेंसियल प्लान के साथ
MamtaKhanna,CFPCM
Mamta Khanna is a CERTIFIED FINANCIAL PLANNER and her Company Best Invest India Financial Advisors constantly trying to increase financial awareness through YouTube Videos, Facebook Page and now with blogs also.
She has experience of more than a decade to serve clients in financial planning domain. She has successfully made and executed various kind of investments, Financial Plans, Retirement Plans and Investment Plans.
