First you need to understand that there is no perfect financial planning and it will never be a perfect financial planning. Most people do not do financial planning simply because they want to do a perfect financial planning or they wait for a perfect timing for doing the financial planning. The most important point is, you just need to start the process. A written plan with a definite timeline is the key. Now you can break down the plan in the short term, mid-term and long term.
Suppose A is a student and he/she have some dream/ambition for his/her life. A have to first determine his/her career goal (what kind of career he/she want in his/her life which can fulfill his/her dream/ambition). For achieving that dream/ambition what higher/specialized education he/she requires. What will be the source of finance for getting the specialized education? Does A’s parent is going to support his/her higher education or A will have to go for education loan from the bank. “A’ has to plan for all these before he actually requires the fund.
The sooner you understand the need for financial planning in your life, it will become easy to understand the value of money. It will help you to understand the time factor which is the most important factor for financial planning. Financial planning is important for achieving the short term, long term or current financial goals. Financial planning is a continuous process. You will become master over a period of time. The reason we insist to start doing the financial planning from early days of your life. It will help you to achieve your desired lifestyle, your objectives and achieving your present and future goals. If you start your financial planning, you will be able to see your current situation. It does not matter if you are starting with zero. The more you are realistic with your present situation, the more chances of making a better financial planning is possible.
Everybody faces financial challenges in his/her life. But there is a definite solution to this challenge. Financial planning is not an easy task but is not impossible though. Financial planning becomes very easy when you can visualize what are the things can be achieved by doing financial planning.
First you need to think about what you can achieve by doing your personal financial planning.
- Managing the unplanned, to manage the finance in a planned way
- Investing the resources more intelligently
- Minimize your unnecessary payments/expenses
- Covering your assets.
- Accumulation of wealth for unexpected/special expenses
- Saving for the retirement
What are the basic steps for personal financial planning?
Following are the basic five steps for personal financial planning
- Evaluation of your personal financial health
- Clearly define your financial goals (in writing by yourself)
- Make a schedule of action plan
- How are you going to implement your action plan?
- Periodic review of progress, reevaluating your action plan if plan is not working, revise plan if it is not working.
Set your financial goals
Setting of your financial goals on the time bound basis
- Short term financial goals
- Mid-term financial goals
- Long term financial goals
So, what are you waiting for if the above points make sense to you, start doing financial planning? Note down everything that is coming in your mind in the first instance and continue adding points every day whenever/whatever comes to your mind. You can arrange those later on. Gradually you will become master of your financial planning in the coming time.