What is Financial Planning?
Financial Planning is a planning process in meeting individual life goals through professional management of finances. This process involves in analysing, organising and managing personal finances in order to achieve financial and lifestyle goals. These goals include financial independence, buying a home, planning for a children education, comfortable retirement or wealth accumulation.
It focus on all the psychological and financial factors in order to provide you with a long-term strategy to achieve your goals and objectives. A financial plan can help you construct the foundation on which to build a secure financial future. The process often involves cash flow management, risk planning, investment planning, tax planning and estate planning.
Financial Planning often involves a 6 step process:
- Establishing your financial goals and objectives
- Gathering relevant information
- Analysing the information
- Developing a financial plan
- Implementing the plan
- Monitoring and reviewing the plan time to time
Why do you need Financial Planning?
The Importance of Financial Planning
- Define goal in life
- Manage income effectively
- Increase cash flow and help to preserve cash for long term use
- Monitor spending habits and expenses
- Build a long term and strong capital-base to wider portfolio of investments
- Evaluating the best investment opportunities
- Provide for family's financial security with proper coverage
- Improve financial understanding for a better direction of financial decision
- Improve standard of living
- Create a systematic and organised saving plan
- Enhance asset accumulation and reduce liability to maximise wealth