Why is Financial Planning Important
Going by the year and a half, it’s pretty evident by now that the future is unpredictable. No matter how hard you try, you cannot really foretell what the future may hold in store for you. What you can do, however, is prepare yourself and your future in the proper manner. Planning your finances based on your goals, desires and objectives is the first step to dealing with unpredictability. And the only way you can achieve your goals is through solid financial planning.
Importance of Financial Planning
Financial planning is an approach rather than a service. Consider it a long-term strategy to have control over your money to achieve your goals and desires. This strategy can help you navigate financial hurdles that could come in the way of your life. Financial planning can help you deal with scenarios and circumstances that may require immediate financial assistance. This method of planning gives you a roadmap to follow as you go along through life.
Significance of Financial Calculators in Financial Planning
There is a financial calculator for almost every task you have in mind. For instance, if you’re looking to estimate how much you need to save regularly, there’s a calculator for that. There’s also a calculator that shows you how much you save on an assumed interest rate for a particular objective, saying your retirement or future education.
In setting your financial goals, the first point to keep in mind is to estimate the amount you would need for that goal and the investment time-frame and inflation rate during the period. When planning for your purposes, you can consider a Systematic Investment Plan [SIP] calculator that shows you the amount you need to invest regularly to attain your goal. For your retirement, you can choose a retirement calculator that can calculate your retirement corpus. Financial calculators are readily available online on well-established financial planning firms, mutual fund distributors, aggregators, applications and more.
Why you need to think early when planning your finances
It’s critical to embark on your financial planning journey as soon as possible. Here’s why.
- It helps you develop an in-depth financial understanding. To enable you to reach your goals, the first step is to have a good grasp of your money situation. But it does not end there. It would help if you took the opportunity and effort to learn about personal finances and understand how to get your finances in order.
- It helps you meet your goals. The aim of introducing financial planning is to meet your short, midterm and long-term goals. So whether you’re looking to repay debt, save for emergencies, save to buy a new car or home or build a retirement fund, planning your finances is crucial. And the sooner you begin, the sooner you can accomplish your where do goals.
- It helps you play the long game. Financial freedom does not take place overnight. There is a specific process involved. Just as physical health and fitness require you to start as soon as possible to enjoy good health in the long run, starting your financial planning right from your first job can help you accrue more capital.
- It allows you to begin saving for a rainy day. The past year has shown the importance of having an emergency fund. In the future, emergency funds could be frequently required. And so, lacking the money for such situations could bring intense stress. Having liquidity can take off a huge chunk of the anxiety that comes with unexpected events. To start conserving for a rainy day, the earlier you begin saving, the easier it can be to handle inevitable hurdles that come in life. For instance, you may want to start by keeping aside 15% of your total net income towards an emergency cushion.
- To cut down money-related anxiety. Stress affects physical and mental health in a myriad of ways. Planning your finances early can give you a feeling of financial security that can help eliminate stress to a great extent. Several studies show how financial security can be a direct predictor of your overall well-being.
Conclusion
The importance of planning your finances sooner than later cannot be emphasized enough. To achieve a high level of financial health, you may want to associate with leading investment and advisory firms such as ICICI Direct. ICICI Direct is a well-established firm that offers a wide range of investments, investment methods, analysis, credible information and research from critically-awarded financial experts to help you secure your financial future. Embark on your financial planning journey today to achieve the freedom you want and the life you’re looking to live.
Cover Image by Freepik
About the Author
Bibhuranjan Editorial Officer, technofaq.org I'm an avid tech enthusiast at heart. I like to mug up on new and exciting developments on science and tech and have a deep love for PC gaming. Other hobbies include writing blog posts, music and DIY projects.
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