A financial plan is not just for multi-millionaires or trust fund babies. No matter what your current financial circumstances are, having a financial plan can offer you benefits that can give you a brighter future in so many ways. How so? Let’s first define what is a financial plan and later, talk about the reasons why you need a financial plan now.
What Is A Financial Plan? Why You Need a Financial Plan?
A financial plan is your personal roadmap that shows you your current financial situation as well as how you can use that information to create goals and action plans that can bring you to a better financial situation in the future. It will show you your assets and liabilities, what you are making at the moment, your future cash flow, your insurance and retirement funds, your taxes, and much more. Basically, a financial plan will give you a bird’s eye view of where you are financially and how you can improve your circumstances. Below are 5 reasons why you need a financial plan.
You’ll Be Ready for Inflation
The cost of having a comfortable life is rising each year. What $100 or P5,000 pesos can buy now is just around 50-80% of what it used to compared to years ago. The problem is that income or cashflow doesn’t always increase by the same percentage; so most people are left having to cut down on the things that they need or want to make ends meet. With financial planning, you will be better equipped in making decisions that can make your money go a longer way.
Can Help You Set Realistic Plans
Having a future plan or goal is easy. Having a plan or goal that is realistic and attainable is another story. When you know where you stand financially speaking, you can make better and more realistic decisions when it comes to growing your money as well as spending it.
You’ll Be Ready for Emergencies
When you have a financial plan, chances are you will be better at building a savings account that can give you some elbow room in the event that you have unexpected expenses such as in the case of emergencies. You will have access to liquid funds that can help tide you over because you will be able to plan for various situations.
Can Give You More Peace of Mind
Peace of mind that comes from knowing that you’ll be okay financially for several months or years to come should some bad things happen is hard to come by. With a financial plan, you’ll have a thorough record of all your finances and will have a good idea about where your money goes. When you know what is going on with your finances, you’ll feel more reassurance be it at making money decisions or simply with knowing that you will know where to turn in the event of a predicament.
You’ll Be Ready for Retirement
Ultimately, having a financial plan is also about having a good plan for your future. Sure, it will help you navigate your life at the present, but all that you do now including how you handle your assets and liabilities will have a huge impact on how ready you will be for retirement.
Do you want to learn more about more reasons on why you need a financial plan? In my case, it helped me clear and consolidate debts, save up, and work on future investments. Feel free to leave a comment or visit Investopedia.com and forbes.com. These two websites helped me a lot!
- February 11, 2022
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