All You Need to Know About Financial Planning

Do I really need a financial plan? This is a question that a lot of people ponder about. Some people feel that financial planning is all about saving regularly in bank recurring deposits.

Unfortunately, saving isn’t enough to accomplish your life goals. To achieve all your life goals such as buying a car, house, dream vacation, and child’s education, you need to have proper financial planning in place. 

A financial plan helps you in constructing a road map so that you can fulfill your financial goals. Also, it helps you in building your emergency fund for any unexpected requirements that may appear. 

What Is Meant by Financial Planning?

Financial planning is a professional approach to assess your present & future financial status and thus allowing you to accomplish your objectives in an organized manner. 

As stated above, it builds a blueprint and gives you the power to fulfill all the expenses of life – both expected & unexpected. 

A full-proof financial plan should include budgeting your expenditure, buying the right assets, setting smart objectives, choosing correct asset distribution, crafting a retirement plan, and more. 

What are the steps in financial planning?

Whether you are wondering how to make your own financial plan or appointing a professional financial advisor, you’d like to stick with these below-listed steps:

• Have a clear idea about your goals: Think clearly about your life goals & what you require financially to accomplish them. Do you wish to purchase a house? Do you have kids? What age would you like to retire? What sort of income are you going to need?
• Have a good understanding of your financial data: What is your net worth? How much money is coming in & going out? The cash you spent previous year, where did it go? How much you spent on groceries and vacation? All these things play a vital role in constructing an effective financial plan.
• Implement the plan: Set practical goals & check them out every month. The objectives must support each other. For instance, a purpose to decrease high-interest credit card debt helps in medium-term goals of enhancing your credit, which will long term goals such as purchasing a house or saving more for retirement. 
•   Monitor & make adjustments according to life events: Financial planning is not a fixed practice. You may have to make some adjustments, relying on how you are moving forward. Often, life events like preparation for marriage or separation, the birth of a child, and health situations are the times when financial plans should be updated. Monitor and make adjustments as required on an ongoing basis. 

What are the components of financial planning?

Financial planning is a continuous process as your goals change, life events happen income varies because of illness, and obviously due to the unforeseen nature of the global economy. Here are the financial planning components that should be a part of your complete financial plan:

• Cash flow planning
• Risk management
• Tax planning
• Insurance assessment
• Estate planning
• Retirement planning

What is the purpose of financial planning?

It is obvious to wonder why you should have a financial plan when you have adequate savings. 

If you’re earning, you can cover your expenditure – there is no doubt about it! But you should know that inflation has the power to eat away your hard-earned cash. 

Inflation is a universal rise in the costs of goods & services over a period. 

Something you bought for $100 today could cost you $110 the next day. Imagine what it’d cost you when you retire from your work after several years from now. 

This is where financial planning comes to rescue by offering you access to adequate funds when you need it the most. 

Financial planning isn’t only meant for somebody who believes has so much money or for somebody who has very little. It’s for everyone who’s not in power to totally manage one’s finances. Everyone out there has some dreams & aspirations, and to accomplish them, you need proper financial planning. 

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Most Read: Want to Start Your Financial Planning but Don’t Know Where to Start? Here Are A Few Tips to Get Started

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Is getting a financial planner worth it? 

Yes, absolutely! A professional financial planner can do wonders for your financial life by looking at the big picture. They can weigh up your financial needs & challenges to come with a plan that best fits your current situation. He or she can guide you through saving strategies, tax issues, retirement planning, and more. 

A professional financial advisor not just helps you in making retirement decisions and executing tax savings strategies, but may also take over some of the finance management accountabilities so that you can put all your effort and energy on earning money & enjoying your life to the fullest. 

Sunil Chugh is a certified financialplanner in Mississauga who can help you in planning for your future financial prosperity. To schedule an appointment, visit www.sunilchugh.com

Disclaimer: The information in this commentary is for informational purposes only and not meant to be personalized investment advice. Please contact your investment professional for investment advice and before investing in any product. ACPI does not publish market research and Sunil Chugh is not registered as a research analyst. The content is from sources believed to be accurate and the opinions expressed are those of the author and do not necessarily represent those of ACPI

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Source From: https://medium.com/@sunilchughfinacialplaner/

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