Tough times can never be avoided. It is said that tough times don't last, but tough people do. Financial market is a mixture of tough and good times. Even those who are experts in the financial world will face tough times. Financial planning will help us in reducing the depth of loss and to convert the loss into profit. In this scenario, it is important we should not get carried away by the group mentality. During tough times, we should follow some basic financial steps to make sure that we have our financial plan in place and follow the same carefully to gain its benefits throughout our future life.
The word financial planning can be defined in a number of ways. The objective of financial planning is very simple that a person must not run out of money whenever a present or future requirement occurring to him or his family. In India, especially middle class families are not well conscious about the benefits and importance of a good financial planning. This will put them in trouble once if they don’t have sufficient income to manage their needs.
Under financial planning context, we can divide people into three major categories such as;
The first category “those who let it happen” don’t bother about their future, they just let their life to go without any planning. The second category “those who make it happen” are really hard working and by their proper planning, they will make their future bright. Third category “those who wonder what happened” want to make their future joyful and happy but don’t want to plan. This category of people will always worry after losing an opportunity.
Out of these three categories of people, the second category of people will be always successful. The hard work and determination makes them to achieve great goals in life.
Accurate financial planning is not a single or simple process. Instead, it involves 3 major phases such as :
Knowing and understanding the financial phases of life acts as a road map and helps you in designing a strong financial foundation to improve your chances of meeting your goals. No one wants to become a burden on our families, relatives or friends. The life of a human being goes through three phases of life. If you are able manage these phases in a proper manner, you will have financial stability in life. These financial phases of life can be summarized as :
This is the period when you plan to preserve and protect your accumulated wealth and prepare to safely transfer it to your legal heirs. Most probably in this stage you will be leading your retired life. Here the cash inflow (income) will be very less.
Knowing these three phases of life helps you to understand yourself and lead a better future. Financial planning is the task of determining how an individual will afford to achieve his life goals and objectives. Preparing a written financial plan is very important to the success of any individual's life.
See Also: Financial Plans For Retirement Benefits
Following are the basic steps to make your future financially safe;
A good financial planning will help you in finding easy and practical solutions for the following;
In our next articles we will discuss different financial plans to be adopted in various financial conditions such as :
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