Spiritual gurus will tell you that the key to happiness is to live in the present. That does not mean you should not plan for the future and act upon it. Does any important aspect at work start without a plan? Why then should your investments and big expenses (such as home, child’s education and marriage etc.) not have a plan? Having a plan for your money is a financial plan. The importance of financial planning is to build wealth stress free and to achieve financial security, stability, and overall well-being.
A survey by Charles Schwab, an American financial services company found that 65% of people with a written financial plan say they feel financially stable, while only 40% of those without a plan feel the same level of comfort. 54% of planners felt “very confident” they would reach their financial goals, compared with only 18% of non-planners.
Top 5 Reasons on the Importance of Financial Planning
It can help you Save
Myth #1 busted – Financial planning is only for the rich
Truth – Financial planning is for everyone
The most common reason for not having a plan is “I don’t have enough money”. Start with a plan. It will help you save even if you start small.
Meeting Big Expenses
You are likely to incur some big expenses in life – such as buying a home or a car, child’s education and child’s marriage, having vacations. A financial plan creates a roadmap for how you will achieve these. Without a plan, it’s challenging to make meaningful progress towards these expenses, leaving you susceptible to financial setbacks.
Life is unpredictable, and unexpected expenses or losses can quickly derail your financial well-being. Through financial planning, you can meet emergencies without disturbing your investments and letting them grow.
Investment and Wealth Building
Financial planning helps you create a diversified investment strategy keeping in mind your risk-profile and big expenses. It can guide your investment decisions and ensure that you’re working towards building a comfortable financial future.
Myth #2 busted – Financial planning is needed only at retirement
Truth – The earlier you start planning and implementing, the more
comfortable your retirement
Everyone will face retirement and it’s crucial to plan for it in advance. Financial planning can help you determine how much you need to save for retirement, which investments are best suited and when you can comfortably retire. Without proper planning, you may find yourself working longer than you’d like or facing a reduced standard of living in your golden years.
So financial planning is not a luxury but a necessity for anyone who aspires to achieve financial security, stability, and success. Without a financial plan, you risk drifting aimlessly and encountering financial difficulties that could have been prevented. Making a financial plan will guide you toward a brighter and more secure financial future.
Now there are so many financial products in the market today and so many options. Not all of them are right for you. So how do you decide which products you should invest in and how much? You can read here for our guide on the 10 steps for a financial or investment plan.
Want to know how much of each investment suits you? Build your personalised investment plan with Propel Money here.