Financing for your future
We all have to deal with finances in our daily life. In a sense, weâre all financial planners. It is a misconception that financial planning is just for âsomeâ people. In fact, financial planning is for everyone like you and like me.{{more}}
Itâs important to analyze what your financial needs and goals are. Then, you measure the resources you need to meet those goals in money terms. Specify the time period during which you want to achieve these goals. Then you write an action plan to fulfill your goals, like, what products to buy and what types of savings to make. In addition, it helps you to fulfill financial goals and meet personal priorities. It takes into consideration your available resources, responsibilities, lifestyle and risk appetite. Allocating your savings across various asset classes to achieve an appropriate risk-reward balance and ensuring long-term financial security are the basics of financing for your future.
One will need to have a financial plan in place. In simple words, itâs a path to help you achieve your lifeâs financial goals and the process of making learned money management decisions in order to safeguard your future. You can make your financial plan yourself, but a financial planning expert can offer the right financial skills and tools to help you realize your financial plan.
You need to ask yourself some questions before making a financial plan, like: What is your current financial situation? What is your vision of your future financial situation? How do you plan to achieve your vision?
You should feel comfortable if your answers are âyesâ to all the above questions. But even a single ânoâ means that you should feel uncomfortable. You need a good financial plan. Your introduction to financial plan starts right here.
The basics of financial plan may include some of the following questions:
Will your family be financially secure, whatever happens to you?
Are you getting the best return in a rising or a falling stock market on your investments?
Is your childâs education financially secure? How about for their wedding?
Do you have enough money for your retirement?
Everyone has or makes a financial plan on some level. Discovering the best online savings account, trying to get out of debt, buy a house or a car, we have made some financial plans to achieve these objectives in our life. A financial plan, simply put is anything that you do for the purpose of getting some kind of material gain, investment or education. They all form a part of your financial plan.
Why Do You Need Financial Plan?
The need for financial plan is all the more very important in the turbulent economic times of today. If you donât have a financial plan till now, donât delay any more, start today! And you must review your financial situation as regularly as you can.
Donât be self-satisfied that you will be okay whatever happens. Face the reality. Unless you develop a financial plan early, it will be too late. The time will pass away and your expense will grow.
It is a truth that very few of us bother to review our financial situation as we move from one stage of life to another. The ever changing socio-economic environment makes it mandatory for everyone to have a sound financial plan. Not only our financial plan should be good, but it should be reviewed at least once a year to take advantage of changing investment opportunities and risks.
No one can predict the future but one can certainly be better prepared for it. A strong financial plan will make sure that you are financially prepared to deal with unexpected events and stormy seas of the market. One need not be very rich to have a financial plan. No matter how much you earn and at what age, a financial plan is important to make your life easier. As our financial situation influences almost every aspect of your lives, a regular plan can help give us peace of mind and protect us from unforeseen, unfavorable situations.
Benefits of Financial Planning
A financial plan is the formal process of charting a road map of financial goals while taking into consideration an individual or businessâs assets, liabilities and credit standing. Financial planning allows individuals and businesses to take firm control of their finances and make the best decisions. Some benefits include:
1. Future needs
The future finance needs become transparent and understood, both in terms of the quantity and also the timing. This is one of the main advantages of financial plan.
2. Appropriate Time
An individual gets time to arrange for the needed finance reasonably in advance and the unnecessary panic of arranging the finance is avoided. It also enables the enterprise to select the most appropriate time for arranging such finance.
3. Assurance
Potential investors, shareholders or bankers are assured that the enterprise is being properly managed, within a realistic framework and not just being pure optimistic.
4. Financial control
Having a good financial plan enables a definite form of financial control. Reducing the impact of an unforeseen financial crisis is one of the main benefits of financial plan. Your family is protected against any financial crisis.
5. Investing in a profitable portfolio
A financial plan makes it simpler for individuals or companies to increase their cash flow and make good investment decisions. They can make the best decisions when allocating their financial assets.
6. Creating a suitable retirement plan
One of the main advantages of financial planning is that it allows people to outline a healthy financial future. By estimating your retirement income and expenses, one can begin to determine the amount you need to save to meet your retirement goals.
Remember that preparing for the future is simply essential. The unexpected can happen at any time. Do you have a good financial plan to meet any challenges of the fast changing economic times? Ensure that your financial health is sound even after retirement with a good financial plan. The need for a plan is even more essential today so donât delay.
Submitted by: Jacintha Hinds, FirstCaribbean International Bank
To mark Financial Information Month October 2010.
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