Financial planning process is for you. To achieve the best results from your financial planning, you may need to be prepared to avoid some of the common mistakes by taking into account the following points :
Set exact targets of what you want to achieve and when you want to achieve. For instance, instead of saying you want to be "relaxed" when you retire or that you want your children to attend "good" schools, you need to quantify what "relaxed" and "good" mean, so that you will know when you have reached your goals.
Each financial decision you may take can affect many other areas of your life. For example, an investment decision may have tax effects that are damaging your estate plans. Or a decision about your child's education may affect when and how you reach your retirement goals. Always remember that all of your financial decisions are interrelated.
Financial planning is a dynamic process. Your financial goals may change over the years because of changes in lifestyle or circumstances, such as marriage, birth, house purchase or change of job status. Revise your financial plan according to the time changes by to reflect these changes so that you stay on track with your long-term goals.
Do not postponement your financial planning. People, who save or invest small amounts of money early and often, be likely to do better than those who wait until later in life, similarly, by developing good financial planning habits such as saving, investing, budgeting, and regularly reviewing your finance early in life, you will be better prepared to face life changes and handle emergencies.
Financial planning is a common sense approach to manage your finances to attain your life goals. It cannot change your situation overnight; it is a lifelong process. Remember that incidents beyond your control such as inflation, interest rates or changes in the stock market will affect your financial planning results.
If you are working with a financial planner, make sure you understand the financial planning process and what the planner must be doing. Provide the planner with appropriate information on your financial situation. Ask questions about the suggestions offered to you and play an active role in decision making.
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