Importance of Financial Planning in your life

Planning something is one of the greatest characteristics of human beings. So, when it comes to investing and money, planning needs to be concrete as there are various variables that can affect your financial planning. As Allen Lakein once said – “Failing to plan is planning to fail”. Fulfilling the future needs as well as improving the standard of living largely depends on the plans you make today.

What is financial planning?
Financial planning is a step-by-step approach to meet anyone’s financial life goals. A finance planner acts as a guide as you go through life’s journey. Essentially, it helps you to be able to control your income, expenses, and investments in such a way that you can manage your money as well as achieve your goals.

What are the benefits of financial planning?

1. Increase savings

It may be possible to save money without having an actual financial plan. But it may not always be the most efficient way to go about it. When you create a good financial plan, you get proper insights into your income and expenses. Then, you can track and cut down your costs effectively and consciously and this automatically increases your savings in the long run.

2. Enjoy better standards of living

Most people assume that they would have to sacrifice their current standard of living if their monthly bills and EMI repayments are to be addressed more diligently. On the contrary, with a good financial plan, you would not need to compromise your lifestyle at all. It is possible to achieve all your goals while living in comfort.

3. Always be prepared for emergencies

Creating an emergency fund is a very critical aspect when it comes to financial planning. Here, you need to ensure that you have a fund that is usually equal to at least 6 months of your monthly salary. This way you don’t have to worry about procuring funds in case of an emergency or a job loss. The emergency fund can help you pay for various expenses during that time.

4. Attain peace of mind

With sufficient and adequate funds at hand, you can cover your monthly expenses, start investing for your future goals even while splurging a little for yourself and your family without any worry. Financial planning helps you manage your hard-earned money efficiently while enjoying peace of mind.

Financial planning for various life goals

The importance of personal financial planning can never be ignored. It is not always just about increasing your savings and reducing your expenses. Financial planning is a lot more than that. This includes ways to manage finances while achieving your financial future goals such as:

1. Wealth creation

The rise in the prices of everyday items means that if you have to maintain or increase your current standard of living in the future, you have to create a sufficient corpus of wealth. You might also want to purchase a better car or a house in the future. All this requires lots of money, and it merely highlights the importance of wealth creation. It is possible to achieve all these goals only by carefully investing your money in the right avenues. Equity mutual funds can be a suitable option for your long term goals. These funds could help in accumulating wealth in the long run.

2. Retirement planning

Your retirement maybe 20 or 30 years into the future. But that does not mean you start planning for it when you are on the verge of retirement. To enjoy a happy and comfortable retired life, you need to start building your financial safety net right now. Planning at an early stage can surely help to secure your future against financial uncertainties. Also, you can invest lesser amounts if you start early and gain from the power of compounding which helps to build a large enough corpus over the 20-30 year period.

3. Child’s education

Education has become very expensive across the world. And in the future, the cost of education is only going to rise. This is why it is so necessary to start planning from the moment your child is born. Calculate how much you wish to earn and start investing in long-term investment avenues that can help you achieve your goals. You can also approach a financial advisor for advice if you are not so sure about how to proceed further.

4. Saving tax

Every year, you have to pay a substantial amount in the form of tax. But you can lower your tax outgo legally now. By planning your taxes in advance, you can identify the best avenues to invest your money as well as reduce your taxable income. Mutual funds are a great way ahead in providing a tax-efficient avenue for investing in your life goals.

All in all, Financial Planning has great importance when it comes to taking care of your finances and helping you in achieving your long-term goals. And to meet your life’s financial goals, the app CowryWise is the smartest way to go ahead with it. So, just download the app now and enjoy impressive interest rates, tools, guides, and the best when it comes to planning out, investing, and saving money online.