According to Alan Lakin, “Planning is bringing the future into the present so that you can do something about it now.”
What differentiates a financially healthy person from a normal person is the factor of planning. In fact, there are various studies that show how the rich never fail to plan. Planning helps us; from assessing risks and opportunities, to becoming proactive and improving performance.
Most things in life are accomplished by setting future goals in manageable timeframes, broken down into everyday actionable steps.
Financial planners use the same technique to help their clients manage their finances efficiently and effectively. Financial planning helps you get from where you are financially standing right now, to where you want to be.
Your comprehensive financial life plan is your personal composition, written to help you achieve the beauty of financial independence.
Elements Of Financial Planning
Every individual’s financial condition is limited by its own set of constraints. When planning or managing your finances, financial planners take into account the various factors that affect your income’s outflow and inflow; carefully considering existing resources before drawing up a plan.
This is the first step towards a stable financial future. Say no to living life between paychecks and start saving a portion from every check you get from now on. 20% of your paycheck is the ideal portion to save, which is what most charted financial planners recommend.
Financial planning is literally a step by step process. Once you have enough saved – $1000 is what is generally recommended – the next step is to look for different options to invest that money in.
Look for stocks and bonds to help you generate money year-on-year; these options provide safe and reliable investment opportunities over time.
Invest in various portfolios; if you’re an aspiring entrepreneur, or are simply looking for more baskets to put your eggs into, investment planning poses a feasible step forward. This helps you multiply your initial investment while securing reserves for the future and starting up a lucrative income stream to help your current and future financial positions.
There are times when we underestimate the level of uncertainty present in the environment. The solution to this uncertainty is insurance.
The concept of insurance is to reduce the risks and financial burdens that come with a mishap. Insurance coverage can help you in times of dire need, allowing you to get out of situations that could very well push you and your family into a financial crisis. Accidents can and do happen, therefore having coverage over such accidents is a must.
Insurance provides you with cover, not just for health, but also your car, house, etc. and when a mishap occurs, you are guaranteed compensation. Insurance is more like a friend in an emergency; it not only covers your financial stability but also that of your dependents.
Statically speaking, in 2017, 6 percent of insured homes had a claim.
One of the things to look for after graduating from college and securing a job is to have your own residence. Shelter is one of the basic needs for us humans, and whether you own your house or rent one, real estate planning will serve you very well in the long run.
There is no fixed pattern of property values as they tend to take turns at short intervals. However, having a property to live in or resell gives you the benefit of having a good portfolio for your long-term requirements. Additionally, there are a plethora of benefits, including tax and long term financial security.
The retirement point is inevitable, but life does exist outside your 9 to 5 job. The things you may want to do regarding your post-retirement plans require financial stability. In this case, you may want to start a 401(k) fund, ideally by the age of 21.
The 401(k) is a qualified retirement plan for eligible employees to save and invest in, and reap multiple benefits once they retire.
Even though there has been a massive decline in the number of young people saving up for their future, financial planning, retirement planning, and even investment planning have never been so important.
The constant fluctuations in the economy and the job markets means that you can’t just rely on your job to maintain a desirable standard of living. Multiple streams of income are needed to just get by in the current economic landscape, and things only get difficult as you near your retirement age.
Get in touch with an experienced financial planner now to get started with a plan that guarantees you stress-free living in the future.