Financial Planning
is a comprehensive evaluation of an individual's current pay and future
financial state by using current known variables to predict future income,
asset values and withdrawal plans.This often includes a budget
which organizes an individual's finances and sometimes includes a series of
steps or specific goals for spending and saving in the future. This plan
allocates future income to various types of expenses,
such as rent or utilities, and also reserves some income for short-term and
long-term savings. A financial plan is sometimes referred to as an investment
plan, but in personal finance a financial plan can focus on
other specific areas such as risk management, estates, college, or retirement.
The Benefits of
Financial Planning?
Financial Planning
provides direction and meaning to your financial decisions. It allows you to
understand how each financial decision you make affects other areas of your
finances. For example, buying a particular investment product might help you
pay off your mortgage faster or it might delay your retirement significantly.
By viewing each financial decision as part of the whole, you can consider its
short and long-term effects on your life goals. You can also adapt more easily
to life changes and feel more secure that your goals are on track.
Common Mistakes in Financial Planning Approach?
The following are some of the common mistakes made by consumers
in their approach towards Financial Planning.
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