On a serious note, most of us had heard the terms like financial planning, investment, management of investment, planning the retirement, etc. These terms have become buzz words for most of the income earners. So is the importance of finance in leading a happy life. Newspapers, blogs, social media, television channels are all behind finance and financial development of the world. They all seem to be highlighting the importance of financial management is some or the other form. One need to seriously understand what financial planning is all about and why is it so important?
Financial planning is nothing but the process of meeting all the goals of your life by properly managing your finances. Earning huge amount in the form of salary is great. But what is more difficult is managing that money in a proper way. Financial planning will help you make a note of everything you do every day. Your current balance sheet helps you in analyzing where you are today and what can you do tomorrow which can help you make your future better than the previous day with respect to money. The finances are directly linked to your goal and vice versa. To fulfill your goals, you need to make sure you follow strict finance plan so that your money do not get wasted. You financial plan should ensure you spend as little as possible and save as much as possible.
Setting a financial plan is time consuming. But once you start doing it, trust me, you will never regret. Make up a plan based on your current goals like purchasing a house or a car, children’s education, etc. Compare your goals with your financial position. Then come up with a strategy which can help you meet all your requirements. Financial plan will help you in understanding if you are in short of money or if you have enough money to spend on your goals. This way all your misconceptions regarding your finance can be erased. Fulfill all your current goals and also save money to enjoy your future goals with out any problem and difficulty. Before designing a financial plan, you need to consider few points which includes your financial status, your short time as well as long time goals, outstanding loan if any, investing in instruments, requirement of insurance, retirement corpus, risk in profile, inflation, tax, etc. Make a financial plan by considering all the above mentioned parameters.
Importance of Financial PlanningÂ
Financial planning helps you in organizing your future. You can play safe once you determine your requirements and compare them with your financial capability. It helps you in improving independent attitude as well as prepares you for any sort of financial emergency events that might happen anytime in your life. If you want to accumulate wealth and want to manage finance in difficult times, prepare a financial plan. You will understand where you are unnecessarily spending money.
It increases the flow of money if you carefully observe the pattern of your expenses. Since it considers the income as well as expenditure of a person, it can help you in selecting a right investment plan through which you can quite easily reach the goals you have set for yourself. You can very well understand your financial position and it teaches you the need of adjustments in dealing with your needs and goals.
What Is The Need Of Financial Planning And The Investment Advisor?
The job of investment advisor is to purchase and sell securities on behalf of his client. If you want to grow up in life and do not know where to start with, consult an investment advisor. They help you in setting up your retirement plans, mutual funds, pension programs, stocks and also help you with the wealth distribution plans. An experienced investment advisor have very detailed knowledge in accounting and finances and also understand the way market fluctuates at different times. Investment advisors are registered and are governed under the act of investment advisors of 1940. This is what separates a financial advisor from an investment advisor.
Responsibilities of financial advisor includes
1) Keeping the clients updated about the investment opportunities
2) Staying up to date with all the market activities and notifying the same to his/her clients.
3) Assessing the risk in investment and helping the client stay away from losses.
4) Make new strategies to help the clients regain the loss they have previously incurred.
Financial planning and the investment advisor mark a remarkable place in your life, if you actually understand their roles in improving the standard of your living.