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Introduction To Financial Planning

Financial planning is a process that aims at determining how and whether a person can meet their life goals through having a proper management of their financial resources. It integrates with the main financial planning subject areas. It caters for both long term and short-term life goals and essential development strategies that can assist an individual to achieve their financial goals. Financial goals may comprise of; planning for your retirement, buying a dream home, savings for your children’s education among others. The main aim of financial planning is to offer direction and meaning to a person’s financial goals. It ensures that a person is in control of their financial decisions as well as understands how they affect their life goals and finances.

An effective financial planning process comprises of two parts; offense and defense. In the financial planning sector, offense means that a person is taking the necessary action to get a more financially secure future. This may involve investing in the stock market or having a savings account that offers interest. Defense entails defending your money from possible financial disasters. Insurance is the ideal defense for your long-term financial plan. Without insurance, a person is exposed to terrible risks that may cause huge financial losses.

Benefits of financial planning
Future needs: with a well spelt out financial plan, you are able to understand your future financial needs as they become more transparent in timing and quantity.

Timing: you are able to plan for any required finances in advance hence avoiding any panicking at the last minute when trying to fix finances. Moreover, you are able to select the right timing to arrange money issues.

Assurance: when borrowing money from banks and financial institutions, your financial plan acts as an assurance that your money is being managed properly. Therefore, it would be easy to acquire loans from banks and relevant financial institutions.

Financial control: financial planning offers a well-defined form of financial control. Reducing the probable damages that may be caused by unseen financial crisis is among the main benefits of having a plan for your finances. You ensure that you are protected from any financial difficulties.

Investing in profitable portfolio: planning your finances ensures that you boost your cash flow and make the right investment decisions.

Create a suitable retirement plan: you are able to have a healthy financial future through estimating your expected retirement expenses and income. You are therefore able to estimate the amount you should save to attain your retirement goals.

In conclusion, a financial plan offers a clear picture of your present financial stand and a good strategy about where you are headed as well as peace of mind to know that your financial future is well taken care of. It offers new opportunities that enable you to achieve your ambitions and financial goals both long and short term. Ambitions have great financial implications that cannot be left to chance. Therefore, the earlier you invest in planning your finances, the greater your chances of attaining your goals.