Reasons Why Should You Have a Financial Plan
By Anupama Deshpande | May 19, 2018

Every one of us wants to accomplish certain things in our life which are called "goals" and majority of them require financial resources. A financial plan can help us stay on track and meet these goals.

A financial plan is figuring out the important objectives of your life and taking steps to achieve those objectives. For preparing a well conceived and comprehensive financial plan, it is very necessary to clearly define your goals. A detailed Financial Plan covers all the disciplines including investments, insurance, taxes, retirement planning, estate planning, will, etc.

It is a perception that financial planning is needed for the rich, but in reality, anyone can benefit from a solid financial plan, no matter how much money you have and how old you are. In a financial plan, you have to make realistic goals and have to make sure you have sufficient resources to fund them.

Before making a financial plan, you need to make reasonable guesses about the important and obvious financial goals of your life. You can create Financial Plan on your own or you can hire a financial planner for the same.

The sooner you develop your plan, the more time you'll have to undertake those goals. It is to be kept in mind that you must have a separate financial plan for each of your goals and also have separate portfolios for separate goals.

Suggested reading Banks are cutting interest rates, What to do Now?

While preparing a financial plan, you will come to know the exact current financial position that you have. It will add up all your assets and deduct all your liabilities from those assets. Then you will be able to assess your current financial position clearly. Then you will be able to target your goals properly.

A detailed financial plan guides you in setting standards or determining a course of action. It will also tell you as to how well are you doing in pursuing your financial goals.

It creates a detailed map based on your prioritized financial goals. It will display you exactly where to spend your money and will also guide where to save & about its duration.

It has been experienced that those who plan well, save well and in an organised manner. When you have clarity about your goals and your finances then you will think carefully before spending your money.

Suggested reading Why Select Debt Fund over Bank Fixed Deposit : 10 reasons

Financial Plan will give you a great sense of confidence that you know well about your financial objectives and also the roadmap to achieve those goals.

An important point to note that your Financial Plan is not a fixed document, it needs to be updated on a regular interval according to changing environment. You need to change or update the strategies described in your Financial Plan time and again. You need to follow it with discipline and patience in order to accomplish your goals on time.

Suggested reading Is it beneficial to invest in bank fixed deposit (FD)