Financial Guides

Financial Planning–Yes, You Need It

You are probably thinking that financial planning does not apply to you because there is not so much planning involved if you are living from paycheck to paycheck. However, you can never be more mistaken about that. In fact, today’s the right time to put your personal finance back on track especially with the financial crisis everyone is facing.

Whether you are earning a low income or a high income, you still need to do some financial planning.

If you are earning a low income, financial planning is very important because your income has to be stretched to cover a variety of expenses. Often times, there is very little money left for savings after paying all the loans and bills. With financial planning, you will be able to budget your expenditure and come up with a savings plan. In this way, you will be able to spend your money wisely.

Another advantage of financial planning is that it can help you grow your money by investing it in an investment vehicle that pays a higher return than the traditional savings account. With proper investment planning in place, your financial goals will be met in a shorter period of time.

The importance of financial planning goes beyond your present situation – proper financial planning now can help you achieve financial security later on in your life. You need to take control over your personal finance now to ensure a better future – you need to take the first step to financial independence now and do some serious financial planning.

Simply put, financial planning is all about sorting out your financial affairs. Financial planning involves the management of wealth, the elimination of financial problems, getting out of debt and the achievement of your financial goals. It is also about making choices as to income spending, debt clearing, and retirement.

Here are a few examples of financial planning that you would need to do at some stage in your life:

• Investment Planning – Investment planning happens when you have a considerable amount of savings money which you want to invest to generate a higher return than a traditional savings account. With investment planning, you will be guided by a financial planner as to the investment vehicles you can put your money in for you to achieve your financial goals sooner.

• Insurance Planning – Insurance planning is financial planning for the entire family – your assets and your health. It is something that will ensure that all your assets are protected, and your medical bills are covered if any of your family member becomes sick.

• Retirement Planning – This kind of financial planning is one that is commonly ignored by younger people. However, it is a very important type of financial planning because you need to plan for your financial security when you get older and stop working.

These are just some examples of some financial planning that you will need to do. Financial planning helps you to spend your hard-earned money wisely and also plan for the future.

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