What is financial planning and why should you do it?
In a world where living costs have risen across the board, many of us are looking inwardly at our finances. If you’re one of them, you may have heard about financial planning.
But what exactly is it?
If you’re wondering how you can better manage your finances in difficult times, read on.
What is financial planning?
In its simplest terms, financial planning is the process of streaming all your finances in order to achieve financial goals. By looking at ways you can earn, save and spend, you can start to have more control over your finances.
What is included in a financial plan?
With financial planning, there is no one-size-fits-all approach. As we all earn, spend, and save different amounts, no financial plan will be the same. However, that doesn’t mean there isn’t a blueprint.
Normally, a financial plan will look at your financial goals (like saving for a house, for example), your monthly cash flow, and details of your pension.
Who needs a financial plan?
It’s important to remember that financial planning isn’t just for wealthy people, everyone can benefit from professional financial planning.
One of the main benefits of financial planning is that it helps provide you with your savings goals. It also helps you keep accountable, so you’re less likely to overspend.
What are the benefits of financial planning?
Fewer money worries - If you’re worried about the cost of living, putting in place a financial plan can help you worry less about money. A plan puts the ball firmly in your court by showing you what you need to do with your finances.
A better perception of your financial situation – When you know exactly what’s going in and out of your bank account each month, you’ll have a better perception of your financial health. Rather than relying on guesswork or hoping for the best (we’ve all been there!), you can make informed decisions about your spending.
You’ll feel happier – A financial plan can give you the confidence you need to look to the future. By eliminating uncertainty and confusion around your finances, you can feel happier knowing that you’re on the right track.
You’ll have clear goals to work towards – A robust financial plan can help you understand what you should be doing to achieve the lifestyle you want by setting clear, actionable goals. By doing this, you’re far more likely to stick to your allocated budget.
Many of us are concerned about our budgeting amid high inflation rates, but the good news is that with a bit of financial planning, you can take control of your spending. Whether you make a financial plan yourself or seek the help of a professional, you’ll be glad that you did when you reach financial freedom.
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