‘Financial Planning’ is one of most talked about concept & process! Many people contemplate about initiating their Financial Planning process. Many have their own confusions, doubts surrounding the subject.
Today, let me attempt to clear the air around some most common myths & beliefs around the concept & process!
- Is Financial Planning applicable to everyone?
Answer is YES! Financial Planning applies to everyone, across all age groups, income levels & professions.
Until few years ago, our previous generation saw limited options for investments, limited options to spend on. People were content & very few were the luxuries to spend money on.
Now, things which were ‘luxuries’ few years ago, have become ‘necessities’ to spend money on.
Income streams & level of income are different today & we have multiple ways to spend money on.
Amidst all of this, we all need to balance our income & expenses while maintaining our ‘Standard of living’. We want to achieve our goals in best possible way.
‘Financial planning’ is thus important & required for all of us! Planning helps us to understand our current financial situations, plan well for our future goals, make suitable changes in existing portfolio, become more disciplined & focused about our money management.
This applies to people from all walks of life today so, financial planning is important for us.
- Does Financial Planning involve ‘Complicated products & processes?
Well, the answer is NO!! Financial Planning is an ART & SCIENCE! It involves calculations, quantitative analysis, qualitative discussions to arrive at mindful solutions.
It includes options & solutions which we are aware about. If it involves anything which we do not have knowledge about, then the financial planner gives required knowledge about it. This makes us Financially aware a little more.
It is not at all required to invest in complicated products & processes, in order to achieve set goals or become more aware about money management. Simple yet effective options & ways can also work in same order.
- Is the purpose of ‘Financial planning’ to ‘Achieve higher returns’ only?
The answer is NO! Well, we all love to earn multifold returns on our money invested. But, the purpose of financial planning is not only to earn higher returns!
We have many other purposes that we gain from financial planning & some of them can’t be counted in ‘quantitative terms’.
Some of the important purposes that we can achieve are as follows-
- Becoming ‘Financially aware’ about our ‘Own Finances’.
- Setting future goals clearly with due understanding of our desires, aspirations.
- Choosing to invest money in the options which we have knowledge about.
- Inculcating ‘Discipline’ in the investment & our approach.
- Becoming more ‘rational’ & reducing ‘emotions driven’ decisions about our money.
- Getting aware about our risk profiling.
- Is Financial Planning ‘One Stop Solution’?
NO, IT IS NOT! It is an Ongoing process! Once the Financial plan is prepared, it is for us to implement it with focus.
In this process, we often face many situations and changes, in our personal & professional life. On the other hand, market & economy also changes.
They all have impact on our financial plan.
This makes us to review our plan on a timely basis so that we can find solutions & suitable alternatives that can suit the changes and the requirements that time.
So, planning is important but, ‘Implementation & Timely review of the plan’, is equally important too.
- Who can assist you in Financial Planning?
A financial planner, who is Qualified, experienced as well as works in ethical way will be a suitable person for your financial planning. This person should advise on your finances in ‘UNBIASED’ way.
He / She will give you ‘Rational approach’, ‘Objective Opinion’ on our own money which can lead us to understand our own money management better.
I hope, this answers these important questions about Financial Planning!
