Financial Planning – A need of the hour

All of us have some dreams in life - whether it is buying a new house, starting a new business, investing your hard earned money in stocks, traveling the world or planning your familyÂ’s future. All these can be termed as financial goals as along with emotions, it also has a monetary value. Financial awareness therefore becomes a vital ingredient to effectively plan the above. Being aware of your requirements early in life leads to better financial planning, and helps you determine your short and long-term goals.

Growing importance

Financial education is getting increasingly important not only for a businessman or an investor but also for a salaried employee who is trying to decide how to balance his budget, fund his childÂ’s education or ensure an income when the parents retire. While people have always been aware, with the current market dynamics and constant changes, it is even more important to plan your finances in advance. We need to be agile and efficiently manage our budgets, to achieve our future objectives.

Different reasons for different seasons

A financial plan of an individual should be customised to meet one's individual needs at different stages of life and it is important to have a balanced mix of instruments to address the various needs of protection, savings and wealth creation. But how would you plan this?

Financial Planning is not just about investments

It is just not about tax planning or investments , but it is a more comprehensive exercise. It includes reviewing your existing funds, planning for your contingency requirement, planning for your insurance requirement , building an investment portfolio that suits your risk appetite and much more!

What you need to keep in mind?

The first step towards financial planning would be to identify your needs and goals. This will lead to the second step of determining the total capital requirement. After estimating the requirements, the next step will be to decide how you will raise the money. However, what you need to keep in mind is that it is not only about raising funds, but it is also important to make a long term, informed investment decision. It would be a good idea to take professional help and consult a financial advisor.

Technology as an enabler

Advancements in the field of mobile technology and increased internet penetration have led to an evolution in the financial management space. These trends have resulted in the mushrooming of new online platforms and services, including those that provide aggregated views of financial products available with detailed comparisons as well as 360-degree perspectives of personal finances. These aggregators cover the entire spectrum of financial products, from credit, to deposits, to insurance facilities, which has led to greater awareness.

Easily accessible tools

The different online platforms provide financial tools which are intuitive in nature and help identify an individualÂ’s financial needs. These tools provide a number of functionalities, including calculating EMIs, eligible insurance amounts and loan repayment tenures, or identifying systematic investment plans to meet savings goals. These platforms act as channels through which buyers can identify suitable financial products.

Another emerging platform is the social media channel, which is a phenomenal avenue to keep yourself updated and engaged. The common thread amongst these avenues is that it is significantly low cost and at the same time extremely convenient.

Plan early

Financial planning is not dependent on age or how rich you are but it is about converting your dreams into reality. All you need to do is define and prioritise your financial goals; analyse where you stand currently (financially); and provide a clear road map of how to achieve your financial goals. With these three things in mind, you are sure to lead a stress-free life!