Lots of people have the idea that financial planning is a complicated process that only the rich people need to be concerned about. To be sure, there are a few practitioners in the financial planning industry itself who promote that impression. In point of fact, however, financial planning is something every person needs to do.
It is not for the wealthy but it is how you become wealthy. It means financial planning is not for the wealthy people but it helps people to become wealthy .People who say they can't or won't do financial planning are really saying they don't mind spending their golden years under the Golden Arches, because that is what will happen to them.
The good news is; it is easy to do; the bad news is; there's no "magic bullet." In short, financial planning for individuals should have two things;
· You have to save some money to invest
· You have to learn how to invest it.
It is not hard as some people fear, but not too simple also. People are showered daily with financial and economic news that has little or no significance to their lives. Stories about derivatives, put option, call option and many other things of the financial world don't serve to educate most people; they just confuse them.
Financial planning takes on a significant role for everyone because most of us are responsible for setting up our own retirement plans. There are many ways to do this, ranging from the simplicity of using your EPF (Employee’s Provident Fund) to a more complex defined financial plan. It's advisable to consult a professionally trained financial planning consultant to decide which type of plan will best suit for your needs.
Whatever plan is chosen, Financial Planning is the key to making it work. Every individual's goal is to be able to retire comfortably. You want your income in retirement to protect yourself against the inflation and other related issues and allow you to maintain your lifestyle.
Definitely, there are financial interruptions for most people along the way - things such as buying a home, starting a business, paying for children's education, taking care of elderly family members, etc. a good financial planning makes it possible to meet those challenges.
In simple terms Financial Planning is all about three things they are:
· Wealth accumulation
· Wealth protection
· Wealth distribution
There are only limited ways to create wealth such as: inherit it, win the lottery or spend less than you earn. Obviously, only one of those options is realistic for most people that is spend less than you earn. The sooner you start to save, the higher your wealth will be. The average person in his 50s should have to save more than half his yearly gross income to retire at the age of 65, whereas a 30-year-old who starts saving just 10% of his income will be able to maintain the stability of lifestyle after retirement. The most important thing is start saving, no matter what your age or how little you can afford.
Financial planning may seem like just another "task" in an already busy life, but failing to do that task could have unpleasant consequences down the road.