Financial Planning Month
One simply cannot emphasize enough the importance of financial planning. A small amount of time spent on it helps you go the extra mile in the long run or achieve that dream a wee bit faster. Chances are high that you haven’t started any financial planning till now. But as they say, it’s never too late and what better time to get started with it than the Financial Planning Month. October is the National Financial Planning Month and it ensures that more and more people are aware of the fact that financial planning is crucial to their financial survival.
What is it?
If you want to go on a trip with your friends, there is a long list of things that you need to consider; starting from mode of transport to the list of people joining the trip, from accommodation to other activities that you want to carry out during spare time. Essentially, you are planning your trip. Now take this into perspective, for a 3 to 4-day trip you put in so much of effort but when it comes to money management, we kind of take it for granted. A good financial plan then includes all your financial goals when it comes to different time frames such as short term, midterm and long term. It also includes ways that can assist you in achieving those goals. You need to have a good blend of savings as well as investments; otherwise, it is going to be a bit difficult to meet those goals.
How to Approach?
Getting a hang of the ground realities is the first step of financial planning. It includes understanding and jotting down all of your current investments, insurance(s) and of course liabilities. And it will not hurt at all if you can get the minor details such as interest rate of a loan or its tenure. The next logical step would be analyzing and budgeting your monthly expenses. Budgeting is just the beginning, as it helps you discover how many of those so-called important expenses are really important. With its help, you can also plan for situations that are not part of the scheme of things.
For an instance, that unwanted trip to the hospital or the unfortunate breakdown of your vehicle, needs immediate action and it can set your finances back a little bit. Thus, being proactive on budgeting helps you overcome such situations. Once you are done with the above two activities, now it’s the turn of defining financial goals. On completion of the goals, it is imperative that you segregate them into short term, midterm and long-term categories. A clearly laid out plan also gives you the confidence of tackling each of them. Your plan must also include ways to overcome unwanted situations and manage risks, while also looking at ways in which you can reduce the burden of taxes.
Do you really need it?
All of the above can seem to be a bit overwhelming. But not getting into this kind of planning will do more damage to your portfolio than anything else. A lot of us get into financial crunch at some point due to lack of proper financial planning. If you feel it is a bit too much, you can always take help of experts or advisors when it comes to financial plans. On the other hand, if you are confident that you can manage on your own, make the most of the Financial Planning Month and take that first step. No matter how small it might be, take the initiative and keep adding all the different pieces together for healthy finance.