What Are the Benefits of Financial Planning?
Having a financial plan is now as mandatory as having an identity card. Like the government made the Aadhar card compulsory for all the citizens, the troubled times that we are facing have made it mandatory for everyone to have some financial plan for the rest of their lives. Times are turbulent, and a financial plan acts as a security blanket. Without a financial plan, you would have to worry about yourself and your loved ones and dependents. You cannot afford to be complacent about your financial obligations. You need to have a bullet-proof financial plan that will get you through whatever obstacles life throws at you. Financial planning should start at an early age. Having a plan right from the beginning will ensure that you are financially sound even when you retire.
Right now, with the uncertainty of the Covid-19 pandemic, it is even more important for our finances to be sorted. We need to know our financial goals, save enough for the future, be aware and make plans to clear our debts and make sure that our investments provide us with returns that will be a safety net for our future.
Benefits of financial planning:
- One of the key benefits of financial planning is having a backup for emergencies. Though the spread of the covid-19 virus has reduced, the risk of infection is still high. We never know when we would be affected by any illness that might need medical intervention. Even if we are not affected, our loved ones, especially our elderly parents whose age makes them more prone to infections, might be affected. These emergencies might cause our bills to rise. Financial planning helps in having a separate fund for such emergencies.
- Another benefit of financial planning is the knowledge and experience you gain. If you want to be a capable investor, you need to understand the financial world. You cannot afford to let go of an investment that offers you multiple returns because you did not understand it. The more you plan your finances, the higher the knowledge you receive. Without this, you will find it challenging to manage your own investments. Once you receive this knowledge of finance, you need not worry about asking for external help to figure out your own financial goals and objectives.
- Most people worry because they lack financial security and stability. It isn't easy to survive in today's world without financial stability. Whether you are a salaried employee or own your own business, you need to know how you will be able to fund your day-to-day expenses. Not only do you need enough to fund these expenses, but you also need to plan so that you save enough money for future use. If you only have enough to cover day-to-day costs and do not plan to keep, then you might not have enough financial stability as you grow older. You will still have to depend on other people for your financial needs.
- Having a financial plan ultimately keeps you inspired and motivated. Having a clear goal and working towards it provides clarity in every decision we take in our lives. Your confidence in knowing what you want and need in life increases, and there is no uncertainty. You can visualise your goals and slowly work towards making them happen. When you align these goals with your principles and values, you are inspired and motivated to work harder and smarter.
- Once you plan your finances, you have a better idea of how to spread your risks. Instead of storing all your investments in one particular basket, you can now experiment with all the opportunities that lay ahead of you so that you get maximum benefits out of minimum risks.
There needs to be a simple and easy way to help calculate and plan your financial goals with all the above benefits. ICICI Direct offers a free online financial planning calculator tool. With this financial calculator, you can calculate all your financial requirements in an instance. Assume you want to know how much you need to save to pay off the equated monthly instalments on your loan; with the help of a financial calculator, you can now get the answer in seconds. However, it's not enough to have these answers; you also need to make financial decisions to ensure that you enjoy their benefits later.
The benefits of financial planning listed above are not a complete list. There are numerous benefits that you can derive out of well thought financial planning. You need to take the effort and time to plan out your future. Once you do so, your mind should be set only on achieving these goals so that you can reap all the benefits of financial planning.
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