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What is Financial Planning?
Financial planning is a long-term process of wisely managing your finances so that you can achieve your goals and dreams. These goals may include
Buying a house
Saving for your child's education
Your daughter's marriage
Buying a car
Eventually planning for retirement
How to Make Financial Planning Work for You?
Set realistic goals
Set realistic goals. Set specific targets of what you want to achieve and when you want to achieve results. Be quantitative wherever possible. You may dream of your goals but be in touch with ground reality. Not all can be a Rockefeller.
Understand Risk and Return
Understand that there is no free lunch. Risk and return are interrelated. Set reasonable objectives. Do not expect high yield investments to not carry any additional risk, they usually do. Most people underestimate the stress of a high-risk plan on its way down. In most cases it is better to be safe than sorry.
Review your Plans
Once the plan has been implemented, it requires a periodic review. This is imperative to adjust the plan to the changing situation in one's life, financial situation and income levels.
Start Early in Life
There is a myth that financial planning is for the elderly. The earlier you start financial planning the better of you will be in achieving your life's goals. It's more advantageous to save small amounts of money at a younger age than to wait till one is much older to save large sums.
Execute the Plan on time
Financial planning is a perishable commodity. What is available today might be gone tomorrow. Speed and timeliness of execution makes the difference between a millionaire and an average performer