People
usually deny taking any step which requires them to share their
personal finances with a third party especially for payment of fees.
We share this concept with various of our colleagues and friends about
the hidden benefits of having a financial plan over an impromptu
action. Let us today discuss the need for planning for Personal Finance.
What
is the Concept of financial Planning all about?
Financial
Planning is about allocation of limited resources to achieve your
financial goals. It is not a one time process but an ongoing activity
which needs to be taken every time, there is a change in your
financial outlay.
To understand how does actually does financial planning help to achieve a better perspective - Let us look at a two different situation to decide which one you fall
into.
I have a plan which helps me
|
I don't have a plan so
|
| Goal Identification
We identify what are the different things we want
to achieve as a family and how much do we need to save for it
financially.
It helps to understand what are our family goals
or unfilled aspirations.
|
Random Goal Spending
I make my decisions
single handedly and think I know who needs what in my family.
I meet my expenses in the near term considering the cheapest
option available with me. I don't consider what are the
charges/penalties I am paying in it.
|
I understand my Financial Worth
I know my asset value from time to time. I know
what are my total assets. My family is aware of my all savings and
ownership. I also understand I have liabilities to be fulfilled before I make new purchases.
|
I don't know If I own or owe more
I usually make calculations when I need a huge amount for some major
expense/purchase. My CA has all transactions recorded for the
financial year, I don't know much about its value.
|
I plan
my taxes
Not
only based on my income do I decide, what kind of amount of tax
instrument I should invest in, but also my goal duration
plays an important role.
|
I just manage
to invest for my deduction slab
I take my tax saving investment decision usually in last quarter of financial
year depending on the TDS deducted till then. I usually buy a one
time premium policy to fill in the gap.
|
I can focus
on bigger picture
I
am already saving for my listed goals and I am very well aware of
what amount still stays with me to splurge or spend on my life
planning goals. I can spend on my dreams.
|
I am
unsure about my next move
I
have just started a new EMI and I am unsure if I actually can
afford to save anything. I can't think of any thing till I have
completed my loan.
|
I am sure of my future
I have secured my
future, I am managing well my today, I am ready to face any
unplanned uncertainties.
|
Let
me just think about today
I
want to go on a holiday but I am not sure if I can go in next few
years. Let us see if I can ever save up more to go for that break.
|
Planning
is not meant to restrict your movement but to guide your steps. It is
a informed move taken rather than uncontrolled maneuvering. So, why
do we shy away from planning. It is not an optional thing but a must
for all those who have numeric values to their goals.
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