Very rarely people understand what the real financial planning is. Lot people assume that the importance financiall planning means just saving money or contribute to an employer’s PF plan and get advice on tax saving investments to think they are all set. These are all the small elements of financial planning. Then what are the big ones?
What is financial planning?
Financial planning is a broad open-ended approach which helps you in developing your aspirations and enriching a life plan. Here you are guided for recommending course corrections throughout the way till the goals are reached.
To achieve your ultimate aim of the Perfect financial planning, it is necessary that you should adopt the common mistakes by understanding the following concepts.
Set measurable goals:
For a perfect financial planning its important to set the specific goal what you want to achieve at that time. For example, instead of thinking of your kid to attend a good school, you need to analyze the word good means and what does it cost. With this, you will get a clear picture of when to reach your goal without confusion.
Effect of each Financial Decision
Your financial decisions may other areas of your life like your investment decision may lead to having tax consequences. Or a decision about your children education may affect your retirement plans.
Periodic re-evaluation of your financial situation
Financial planning is an evolving process, the goals decided by you can change over the time due to circumstances like the change in lifestyle, relocation, marriage etc., Re-checking your financial plan may help you to make an update in long-term goals if required.
Planning Early is the best mantra for financial planning
The motto behind the art of financial planning in India is “plan early to retire early.” People who plan early to invest or save in small amounts do better than the people who are planning this later in life. Simple habits like saving, investing, budgeting and reviewing your finances are the things to consider while practicing best financial planning for a salaried employee. You will be ready for the changes in life and meet the emergency situations.
Financial planning is to the disciplined approach to meet your long-term goals. These cannot change your situation overnight, its a long-term process. Always remember that there are some things in financial planning which you cannot control like inflation, the stock market or interest rates will affect your results.
Realize that you are in charge
If you are taking the help of the financial planner, make sure that you understand the process financial planning and what he should be doing. Maintain a good relationship with the planner, provide him with all the financial information needed. Ask questions and be prompt in decision making.