Monday, April 15, 2019

Benefits of Financial Planning

  Why should I go for financial planning? How can it benefit me? I am anyway investing whatever I can - what else can I do? These questions may arise in your mind. Get the answers here.

(1) Makes you more organized


Financial planning requires you to gather all your financial info in one place. This exercise itself becomes an eye-opener for many and becomes the first step towards a better and organized financial life.
(2) Gives a comprehensive view
You must have played or seen others playing jigsaw puzzle game. Many different pieces of a single picture are scattered all over in the game and you are supposed to put everything in its proper place to form a picture. Financial planning does this for you. It helps you to see the complete picture made from pieces of your financial life.
(3) Helps you in setting up goals
It is an age-old saying that when you write something, chances of forgetting that is less. Similarly, when you write your financial goals in required format, it gives you more clarity and objectivity. Now you know – why you will require something, how much you will be requiring and when you will require. Life’s critical goals cannot be and should not be drawn in vague.
(4) Puts purpose before action
We often make investments or take insurance cover at random. We do not have any specific goal in mind. Financial planning, when links our existing assets or future investments with some or other financial goals – it puts purpose behind our every action. When strategy is in place, product follows – not the vice versa.
(5) Asset allocation made easy
Not life’s all goals are similar. Some are short term, others can be medium term or long term goals. Investments need to be planned and assets need to be chosen accordingly. Also, a long-term goal does not always remain long term. When a goal is nearby we need to tweak its asset allocation so that we achieve the goal smoothly and without any last moment surprise.
(6) Risks are measured
If risks are not handled properly, everything else can fall short. Financial plan in its entirety addresses all possible risks with life, health, assets and emergency. It first helps you to measure the risk and then get the right cover for you.
(7) Monitoring and reviewing
When every asset is linked to some or other goal, monitoring their performance becomes easier as now you know exactly what return is expected from what investment. Review of financial goals and insurance is equally important. With changes in income, expenses, priorities and risks – many a times we see that our goalpost itself gets shifted. Financial plan helps us to track such changes early and take necessary timely actions.

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