Last week, my few friends set on a Road Trip to Ladakh. They had planned each & everything properly. They jotted down the route of where to take a break & how much distance to be covered daily. They had a step by step series of maps of their planned route!
Planning your Trip is a vital thing…but have you thought of having a Financial Plan?
Reaching your Financial Goals is not less than a Trip…If you don’t know your destination, how will you know when you have arrived?
Many may wonder – “Do I really need a financial plan?” Some may feel that regularly saving in Bank RDs & investing through SIPs in Mutual Funds will do the job!
In order to become rich, you need to make your money work for yourself!
Well, a Financial Plan ensures that you are ready for the dynamic situations. Here are a few reasons depicting why having a Financial Plan is crucial.
- Managing Cash Flows
You definitely need a Financial Plan if you are not aware about your monthly expenses. Many people fail to understand how their monthly salaries get extinguished, leaving them with very little or absolutely nothing to save. Thus maintaining a budget is crucial to stay on track towards your long term goals!
- Managing Debt Efficiently
Almost every other person is under the debt of Home Loan or Car Loan…using Credit Cards is very common…People live their lives EMI to EMIs. When the liabilities turn into a debt trap, it ruins your Financial Well Being.
- Set the Right Asset Allocation
It is always advisable to put your eggs in different baskets. Understand your Risk Taking Ability first & allocate your resources accordingly. Moreover, it is extremely important to streamline your Investments.
- Set SMART Financial Goals
Write down your Financial Goals as per their time. For instance, your Short Term Goal would be in the time frame of less than 3 years & so on. This gives you a clear picture of how much you need to save for a specific goal.
- A Blue Print of your Life
If you don’t have road map of how to achieve your dreams, a prudently drawn financial plan can be your blue print to meet all your financial goals.
Hence financial planning is important to make your unclear pictures clear & making your desires achievable!