Financial planning is a holistic process for reaching financial goals of an individual.It can be done by proper management of personal finance.Personal finance include all type of personal savings, investments and loans.
Normally,people start to save with bank accounts,chit funds or post office schemes.Investments means putting money in shares,mutual funds,real estate or commodities such as gold.Financial goals are very important in financial planning.These are life needs such as buying a home or property, savings for children’s education and marriage, wealth creation , retirement planning etc.
Professional Financial planning process consists of six major steps.
1.Collecting client's financial data about income,expense and netwoth .
2.Setting financial goals to fulfill ambitions.
3.Analysing current financial condition.
4.Creation of strategy to meet life goals.
5.Recommendations for transforming personal financial condition to better levels.
6.Periodical Review of the plan to assess the progress .
Financial planning process help us to analyse personal assets, liabilities and networth. Some people may be in a debt trap due to overspending or lack of financial discipline. Others may suffer due to concentration in too many financial products.No agent or broker can provide a holistic solution.Financial planning is the solution to attain life goals.Finding right financial scheme or product is not an easy task for a common man.
Financial planning fix priorities for life.It helps to avoid unnecessary expenditures.we can fix different time horizon for short term,medium term or long term goals.Thus,financial planning build the foundation for reaching financial freedom.