While one cannot predict the future, one should certainly be better prepared for it as everyone have goals to be fulfilled at every stage of life and those goals and those goals will be achieved if one has done the financial planning. It is always better to start planning early as prevention is better than cure. Financial planning is a systematic approach whereby an individual maximizes their existing financial resources by using appropriate financial planning tools and investment vehicles to best achieve their financial goals and objectives. In other words, financial planning is the process of meeting one’s life goals through proper management of one’s finances. These goals can include buying a house, saving for children’s education, buying a car, protecting family against financial risks of planning for retirement.


The need for Financial Planning

The need for financial planning services arises from the need of meeting the financial goals of one’s life.  It is financial planning and management that helps one to take a comprehensive look towards one’s future financial needs and goals including cash management, debt management, education funding, retirement planning, estate conservation and portfolio management. Financial management gives one the direction to make informed decisions about their investments so that one won’t make any mistakes and can reap the benefits of their financial planning for the rest of their life.


The following are some of the benefits of proper financial planning:

•Financial planning is based on individual risk profiling, and it provides a road map to achieve financial goals

•Financial planning helps one take a look at the 'big picture' of one’s financial position and it guides to examine one’s current financial status and determine objectives.

•It helps in devising a strategy or plan for how one can meet their goals given their current situation and future plans. It also identifies weaknesses and recommends improvements.

 •It puts in place the risk management system to meet uncertainties of life through efficient retirement planning, insurance planning, tax planning and estate planning.

 Financial planning is the process of managing your money to achieve personal economic satisfaction. It allows you to control your financial situation and provides a feeling of security and less stress.

 •It is a disciplined approach to managing one’s finances to reach life goals. It involves systematic & disciplined investment mechanism, which helps in creating wealth over a period of time. It helps you to become more responsible towards disciplined investing.


Personal financial planning can be done in the following 5 steps:



 The financial condition of an individual can be gauged by formulating balance sheets and income statements. The personal balance sheet calculates the assets on the one hand and liabilities on the other. Assets include car, house, stocks, and bank account. Personal liabilities include credit card debt, bank loan, mortgage etc. Information regarding personal income and expenses is listed under the personal cash flow statement.


Goal setting

 After having done a proper assessment of the financial situation, an individual can set up long term as well as short term goals.


Constructing a plan

 Once the goals are set, appropriate strategies should be formulated in order to fulfil the goals. This could be achieved by curtailing unnecessary expenditure or by expanding the income level by investing in stocks, real estate or other interest earning assets.



 For proper implementation of the financial plans individuals lack patience and perseverance and hence seek professional help from financial planners, investment advisors and lawyers.


Monitoring and reassessment

The financial plan of an individual should be monitored from time to time for re-evaluation.


Reasons why Financial Planning is Important

Financial planning helps a person determine their short and long-term financial goals and create a balanced plan to meet those goals. Here are ten powerful reasons why financial planning – with the help of an expert financial advisor – will get one to where they want to be.


 Income-It's possible to manage income more effectively through planning. Managing income helps one understand how much money one will need for tax payments, other monthly expenditures and savings.

Cash Flow- Increase cash flows by carefully monitoring one’s spending patterns and expenses. Tax planning, prudent spending and careful budgeting will help one keep more of their hard earned cash.

Capital-An increase in cash flow, can lead to an increase in capital. It allows one to consider investments to improve their overall financial well-being.

Family Security- Providing for family's financial security is an important part of the financial planning process. Having the proper insurance coverage and policies in place can provide peace of mind for one and their loved ones.

Investment-A proper financial plan considers one’s personal circumstances, objectives and risk tolerance. It acts as a guide in helping choose the right types of investments to fit one’s needs, personality, and goals.

Standard of Living-The savings created from good planning can prove beneficial in difficult times. For example, one can make sure there is enough insurance coverage to replace any lost income should a family bread winner become unable to work.

Financial Understanding- Better financial understanding can be achieved when measurable financial goals are set, the effects of decisions understood, and results reviewed. Giving one a whole new approach to their budget and improving control over one’s financial lifestyle.

Assets- A nice 'cushion' in the form of assets is desirable. But many assets come with liabilities attached. So, it becomes important to determine the real value of an asset. The knowledge of settling or cancelling the liabilities comes with the understanding of finances. The overall process helps build assets that don't become a burden in the future.

Savings- It used to be called saving for a rainy day. But sudden financial changes can still throw one off track. It is good to have some investments with high liquidity. These investments can be utilized in times of emergency or for educational purposes.

Ongoing Advice-Establishing a relationship with a trusted financial advisor is critical to achieving one’s goals. The financial advisor will meet with to assess one’s current financial circumstances and develop a comprehensive plan customized for an individual.

The first step in developing a financial plan is to meet with an advisor. This complimentary process begins with a review of one’s current financial circumstances, anticipated changes, future goals, and results in their customized plan.




Tips for Managing Personal Finances

The following are some of the ways that one can follow to manage their finances better and prepare for a comfortable future:

Budgeting and self-control

It’s so easy to spend money, and with the amount of temptation surrounding one on a daily basis, it can be difficult to know when to rein it in. Many people overspend on a regular basis and a coffee here and a takeout there could soon end up costing a lot over the month. These small but significant spending habits could end up affecting one’s financial health and in extreme circumstances could lead to unnecessary debt. A great way to take control of this mismanagement of money is by using a budget planner. There are a variety of websites and apps that can help one monitor what they are spending and can assist one in making changes for the future. There is an element of self-control needed for budgeting, and one may need to evaluate what saving money could mean for them.


Protecting and Building Wealth

If one is at the stage in life where they have built up a pot, one may want to think about protecting and growing their wealth to sustain a comfortable lifestyle for retirement. Hiring the help of a professional can assist a person in making the most of their money plus they can give one advice on where they can invest to make one’s money work harder for them. Resources such as personal capital provide investors with dedicated financial advisors and also an innovative mobile app to help keep track of spending and income.


Saving for the future

Although it may seem like a long way off for some people, retirement is something that needs to be carefully considered when looking at money management. One may be able to take advantage of their employer’s company-sponsored scheme, which helps to build their pot while they work, but one also may consider retirement savings  alongside this when contributing to their individual retirement plan. Putting money aside each month for the future should be a regular commitment and will see one reap the rewards in the long term.



Taking control of one’s financial future is important whatever a person’s age. Thinking about saving for the future early is ideal for getting the most of one’s money at retirement. Planning and budgeting also gives a person insight into where their money goes and helps one to change spending habits for the better. If one have debt, managing this and striving to pay it back will also provide a more stable outlook for in one’s later years. Managing money can sometimes be a daunting and challenging task so knowing where to start gives one the best chance at realising their financial goals.



1.       Reasons Why Financial Planning is Important| Blueshore Financial


2. Importance of Personal Financial Planning

3. What is Financial Planning and why is it Important| Nerdwallet

4. Importance of Personal Finance Planning| Personal Finance Basics