Most of you know the importance of saving money. When it comes to savings and investing the saved money, people fall into two categories: planners and non-planners. Planners have specific goals in mind, such as how much money they want to save and why. Non-planners, on the other hand, save money when they can and hope everything will work out in the future automatically.
However, with rising inflation and higher cost of living, things may get difficult, if you don’t plan your finances well. Financial planning in India has never been this important as it is now.
Benefits of financial planning
If you have ever been in touch with a financial advisor in India, they will ask you to start by creating a financial plan. It is the first step in your financial journey. Below are some benefits of financial planning:
A written plan gives you confidence: If you have your financial plan in your head, you don’t have a financial plan. It should be on the papers, covering every minute detail. Once you have it on paper in front of your eyes, you feel confident about what you are doing – you have a measurable goal to work toward. You can track your progress, and if things are going as planned, you can continue your journey without a doubt. If not, you know where to make adjustments.
It sets up goals: What is life without goals, right? A financial plan defines your financial goals. Also, it creates strategies so you can comfortably achieve them. If you get in touch with the best financial advisors in India, they will have a clear plan from the start to the endpoint. You may be in your 20s or 50s, but you need to have clear goals – short, medium, and long-term goals.
Emotional and mental health benefits: There is already too much for you to worry about – your job, your career growth, planning a vacation, etc. You can be at peace once you have your financial plan ready. Recent research has shown that individuals with a financial plan are less stressed about their future compared to those who do not have a financial plan. You are more likely to overcome setbacks when you have a financial plan.
You form better habits: Financial planning is not only about investing. It is also about managing money. Once you learn to manage money, it does wonders for your confidence and quality of life. For example, under financial planning, the first thing you do is create an emergency fund. Also, you consider fees and investment costs, portfolio rebalancing, etc. All these are good investing habits that you build once you get into financial planning.
It is personalized: Investment advisors in India evaluate your current financial situation – which is unique. Based on the findings, they create a personalized investment plan for you. Your living standards and financial goals largely depend on your occupation. A financial plan considers all these aspects.
You don’t compromise on your lifestyle: With financial planning, you don’t have to compromise on your lifestyle. However, you still need to avoid wasting good money after bad ideas. You can plan and target a living standard over several years by factoring in inflation and other factors and plan your investment accordingly.
Hiring a financial planner? Avoid these mistakes
Now that you understand the benefits of financial planning in India, you must be looking for a financial advisor. However, before you do so, you need to avoid the following mistakes:
- Understand the process of the advisor and see if you are comfortable following it – don’t skip this step.
- You must have a clear understanding of the term sheet of the financial planner. Evaluate whether he will only help you invest or hand-hold you to convert your dreams (goals) to reality.
- Don’t hesitate to talk about the fees – there are different models under which an advisor can charge you for the services.
- Don’t fall prey to their sales pitch. More often than not, it would be good. Your primary focus should be on the credentials.
We have listed only a few of the many benefits of financial planning. The crucial thing is to get started – you can do it on your own (if you have expertise) or consult a financial advisor.
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