Financial planning is a responsible and effective way to reach your financial goals, it gives you the freedom and security to plan for the future. Listed below are 4 reasons financial planning is important.
- Know your worth: What assets and liabilities do you have and how much are they worth? Consider stocks, bonds, home loans, savings accounts, retirement annuities, medical insurance policies and education. If you are in debt solve your debt issues with debt management, you will regain financial control. Visit a financial planner to assist you with managing assets, keep a budget plan and know how much you earn and spend every month. Budget planning is the first step to disciplining bad spending habits.
- Effective communication: Majority of people are married within community of property, their assets and liabilities are joined. For this reason couples should keep track of combined spending. Effective communication about daily expenses, education, living costs and entertainment are essential to financial planning. A team effort is required to maintain a successful budget plan. Include your family in financial decisions as it will impact them. Consider your children’s education and health, plan for further studies and family medical insurance.
- Protect your assets: Once you know your financial worth, you can ascertain how much money you have aside for emergencies and unforeseen events. Saving 10 percent of your gross income every month will provide you with a secure future. Life insurance and disability cover will protect your family from unforeseen events. Write a will, list your assets and include beneficiaries.
- Plan for retirement: Retirement annuities are part of financial planning, it is essential to know at what age you want to retire, how much money you require to cover income & expenses. Common sense is required to budget and it is certain that you can achieve your financial goals with financial planning. Keep a list of desires for when you retire, it will propel you to continue spending your money wisely. Financial planning requires commitment, consistent evaluation and discipline.
Financial planning will keep you focused and in control of your assets and liabilities, it will give you financial freedom and security. Your family is protected from unforeseen events and your children’s education and future is secure. Planning for retirement is essential and it is a valid part of financial planning, when you are in control of your finances you are in control of your life.