When you are healthy and when you eat food you do not think about anything but when you get disease like diabetes or blood pressure than only you tend to think about calories and sugar in the food, in the same way when an individual is earning money then an individual do not bother about anything it is only when individual get into financial trouble when he or she thinks about financial planning but by then it’s too late. Financial planning is very important concept and majority of individuals think that financial planning is for rich people only which is a big mistake because any individual who is earning money either through job or business needs to make financial plan about the deployment of that money so that an individual can reap the benefits of investment made by him or her in future. Let’s look at some of the benefits of financial planning –
- The first and foremost advantage of financial planning is that it makes an individual disciplined about money which is very important because saving money is far more important than earning the money as world is filled with examples where people who are in good job or business end up getting bankrupt due to lack of discipline about money and financial planning. A good example of bad financial planning will be people who are extravagant and when those people win lottery they end up losing the entire lottery amount in short span of time because they are not good financial planners.
- Another benefit of financial planning is that in event of contingency such as accident or health related scare one does not have to worry about financial related problems arising due to such scare because if you are doing financial planning then chances are you have made provision for such contingencies and therefore such contingencies won’t affect you much because of good financial planning.
- A proper financial planning can lead to saving of taxes because when you are not doing financial planning than you would not bother about tax or other such deduction and therefore question of saving those taxes does not arise because your line of thinking is to consume whatever you have earn rather than save.
- Financial planning is not only good for you but also for your spouse and children because investments made by you today will reap benefits for your family for next many years because of compounding of investments and it can be experienced only when you start investing money early.
- Financial planning makes an individual goal oriented and therefore all activities done by individual will be directed towards achieving the target and therefore an individual will never commit mistakes related to money. For example if one has set target of saving $20000 per year than he or she will make sure that the goal of saving $20000 per year is met and indirectly it will help in curbing extravagant and unnecessary expenditures.
As one can see from the above that there are many advantages of financial planning and hence no matter where you live or work it is of paramount importance that you learn and practice financial planning in your life.