The Importance of Financial Planning
Financial planning is one of those things that we all think we’ll get around to at some point, but then many of us never do. The thing is, good financial planning can make your life run so much more smoothly that making an effort to do it is a really good idea.
If you still aren’t convinced about the importance of financial planning, then check out these 9 reasons why it matters.
1. It helps you understand your money better
Perhaps, the most important reason to start financial planning is that it helps you to get to grips wraith your money more effectively. It enables you to see how much money you have coming in and going out each month, so you can make adjustments if you want to, for example, save more for a vacation, and it makes it much easier for you to plan for the future in terms of tax payments, retirement savings and things of that nature.
2. It will lower your stress levels
Financial planning enables you, as mentioned above, to better understand your financial life. This means you are less likely to get stressed about various money issues because they will have been planned and accounted for in advance. Since money is one of the biggest causes of stress, this is a huge benefit that cannot be understated.
3. It will secure your family’s future
If you have a family, then you really do need to start financial planning as soon as possible. Taking out a life insurance policy that will ensure they have enough to live on if anything happens to you, and getting legal advice for preparing your will, for example, will give you and your family peace of mind that, no matter what happens, they will not have to worry about the financial side of life. None of us like to think about things going wrong and us not being there for our kids, but it can and does happen, so financial planning is so very important.
4. It can help you achieve your dreams
Whether you dream of opening your own interior design business or taking a year off work to travel the world. Good financial planning can definitely help you to achieve your dreams because, let’s face it most dreams cost lots of money to achieve, and by carefully budgeting and making as many savings as you can in as many areas as you can, you can really make your dreams come true.
5. It can make your money work for you
One of the biggest benefits of good financial planning is that it will leave you with a surplus of money that you can invest. Investing your money is the best use of your cash, once your basic needs have been met because it makes your money work for you and when your money world for you, you will start accumulating wealth far more quickly without having to do any extra work on your own behalf. If you are not currently investing, then you should definitely talk to a financial adviser about the possibility of doing so.
6. It will help you get through financial emergencies
Most of us will have a financial emergency from time to time; the car will break down unexpectedly and need to be repaired at great cost or the fog will get sick and you will need to cover the huge vet’s bill to get him well again. If you are someone who plans your finances carefully, this will not be a problem because you will have set aside a pot of money in an emergency fund which can be accessed whenever a financial crisis shows up.
If you were not to have an emergency fund, you may end up having to take out expensive credit to plug the holes in your finances, which can be very stressful and take you a very long time to pay back.
7. It helps you build assets
Having assets like property is a really positive thing as you get older. Assets help you to buy and maintain wealth in the long and short-term. If you are someone who is a financial planner in your personal life, then you will prioritise gaining assets over having a good time and frittering your money away on things that do not matter, so when the time comes for you to retire, you will have built up a nice nest egg.
8. It enables you to retire earlier
Speaking of retirement, if you use financial planning to build up assets, increase savings, and make smart investments, you will certainly be able to retire from work earlier than most people, should you choose to do so. Often financial planning makes clear the benefits of sacrificing a little extra comfort now to have a lot more comfort in the future, and no better is this illustrated than in terms of ploughing any extra cash you have into your pension fund so that you do not have to keep working well into your old age, like so many people do.
9. It makes you think about your choices
Another huge benefit of financial planning is that it makes you think much more deeply about every financial decision you make. So many of us are so impulsive without money, spending it like water without giving it a second thought or investing in the next new thing without researching the market to see if it is actually a good idea. When you start financial planning, you start understanding money more, and you start thinking more about what you do with it as a result. You stop being so impulsive and look at the figures to see if you are likely to be doing the right thing or not. It makes you a grown-up about money, basically.
As you can see, financial planning really is vital for those of you who want to stress less about money and make a brighter financial future for you and your family, so what are you waiting for? Start financial planning today.