In this modern word, life style is changing very rapidly. Advanced technology and ease of information makes life easy. But many times information can mislead the financial journey of an individual. Now days, many people are start investing on the basis of review from friends, colleagues, relatives, business news channels or advertisement. It’s like taking medicine from pharmacist without consulting a doctor. Here, the role of Financial Plan is very important. If you go back 20, 30 years back, life was at a different stage. The need of an individual was different than today. The financial world was not dynamic like today. You grandparents were living with limited source of income and still there can able to save for their future but today, people earnings are growing with the same time spending are also growing rapidly.
Have you ever pause and think about your personal finance? In which direction are you going in your financial life? Will you able to meet all of your life stages goals with the current source of income? What if unfortunate event happen to you? Will you family survive with the current level of your financial corpus? Do you any spare contingency fund for any medical emergency? Are you on the right investment vehicles? Do you periodically review your finance?
There are some global findings also showing the skeptical story on personal finance and life stages goals.
The economic challenges facing those born between 1980 and 1997 reflect in their retirement prospects, reveals HSBC’s latest Future of Retirement survey.
Why are millennials worried?
They are seen as less fortunate than previous generations.
• 52% of respondents feel millennials have witnessed a weaker economic growth than previous generations.
• 60% feel they are bearing the consequences of decisions taken by the older generation, like the global financial crisis and rising national debt. 46% believe employer pension schemes will go bust and there will be no payouts for millennials.
• 57% of millennials are convinced that their generation will live long and they will have to support themselves for long.
• 65% are concerned that they will run out of money in their twilight years.
What are they doing about it?
On an average, millennials start saving for retirement at 27.
• 13% say they have not begun saving yet.
• 68% are willing to cut back on current expenses to save more for the future.
• 76% think curbing spending is a difficult, but necessary, step.
Source: The sixth edition of the future of Retirement Study, a global survey from HSBC.
These are some questions which are forcing us to think about our personal finance. The Personal Financial Plan is like a navigator which guides you on your financial journey. Many people do not have clarity or lack of knowledge about Financial Planning. So here are few of the most pertinent reasons for you to have a Good Financial Plan:
1] Helps you to achieve you goals:
First you must know what are of your goals. It may be like you want to take vacation or your children higher education or children marriage or own retirement. You need to have right road map to achieve them. A financial plan is a road map to your future; it tells you where you are today, where you would like to reach. Financial Plan tells you if you are on the right track to achieve of your goals. If not, your road map will need to align with your goals. This road map has to be regularly monitored to ensure you remain on the right track to achieve your goals.
2] It protects you from bad times:
Life is fully uncertain and not always a bed of roses. Be sure you have enough life, health and property cover when things don’t go as you plan. A financial plan can help you to identify how much insurance you need to protect your family. Many people either buy insurance to save tax or as an investment without knowing the quantum of insurance they actually need for protection. It is important to have contingency fund, an initial part of any financial plan.
3] You can accumulate more capital:
A proper financial plan considers your personal circumstances, investment objectives, goals and risk tolerance. It helps you to choose right investment vehicle which fits your needs and goals. Good investment, proper diversification and solid planning are the main pillars of good personal finance. This helps you to save more for your future need and enhance to accumulate more capital.
4] Manage your cash flow efficiently:
It helps you to manage you cash flow in an efficient manner. It helps to protect from unnecessary spending. It can allow tracking your monthly budget in a smooth manner. You can have proper picture of your income and specially expenses. A sound financial journey needs proper cash flow management.
5] Feel secure and confident about what your are financially:
It always good to see in writing; How much your net worth? What is your cash flow like? It is scattered in 10 insurance policies, deposit receipt and statements you may not need or tied up in account forgotten about? Just gathering all your financial information and consolidating into one financial plan will make you feel enormously better about your finance. Getting your financial life in order to provides clarity and removes unnecessary stress.
6] Give your financial life focus, direction an organization:
Becoming a rich is all about starting early, better planning and being disciplined. It is for all these reason that you need to have Financial Plan.
So Get Your Financial Plan Today!