Why is financial planning needed?

Author
Anmol Gupta

Being a Financial Planner, I wish to share the importance of financial planning in each one of our lives. With the increasing cost of living in every part of the world, without proper financial planning, I should say that we cannot secure our future. Here are some reasons I wish to share so that you can understand the importance of financial planning and the effective role it can play in your life:

To fulfil financial goals

Most of us can move forward only when we have goals set for us. Experts are of the opinion that setting short-term goals and achieving them will act as an excellent stress-reliever and confidence booster. So, if you wish to stay stress-free life, setting certain goals and achieving them will surely help. Here, financial planning will play a major role in achieving your financial goals. You might have a plan that in the next 10 years, you should have a house of your own worth some X amount. Proper financial planning will help you achieve this goal. Here are certain things you will have to do when you are planning for your finances.

  • Do not make wrong decisions: If you think that you can plan your finances on your own, you might not be right at all times. On the other hand, an expert guidance will help you safeguard yourself from wrong financial decisions. When making the right decision is important, keeping away from wrong decisions is even more important to achieve your financial goals.
  • Do not get trapped in wrong instruments: I want you to remember one thing most importantly when you are looking for ways to fulfil your financial goals. Yes, you should never get trapped in the wrong instruments. So, I would suggest you get help from a professional financial advisor before you move on with selecting an instrument for investing your money.

Better manage your cash flows:

The right financial planning without any doubt will help you in effectively managing your cash flows. If you do not have the right plan, you will one day think about where all my income has disappeared. On the other hand, when they are channelized to proper investment channels, you will feel satisfied that you have managed the cash flow in an effective manner. This is where the right financial planning will help you a lot.

Contingency planning:

You know that the human life is unpredictable. Unexpected medical and other expenses can come our way in many instances. Of course, we do not want these things to happen in our lives. However, we cannot stop them from happening. When such a thing happens in your life, a medical insurance or a health insurance in which you have invested your money with a proper financial planning will help. So, not just for regular situations, even for contingency planning, the right financial planning is essential.

Controlling expense and prioritizing them:

Not just at work, prioritizing is important when you spend your money as well. The right financial planning will help you with controlling your expenses. Even, you can prioritize the most essential expenses and can plan accordingly.

Hope it gives you a gist of why financial planning is needed. Happy to answer any queries.

Originally published on Quora.

About the Author
Anmol Gupta
Anmol is CEO at 7Prosper. He is SEBI Registered Investment Adviser, with expertise in Finance and Technology domains. Anmol is committed to help people achieve their financial freedom.

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