Money is an awkward topic to talk about, but we must discuss it. As one grows older, they find themselves faced with more financial responsibilities. This is where we then categorise two types of people: those who organise their finances and those who take it day-by-day. Have a look at what is financial planning and why do you need it.
The planners are the ones who know every cent that their money goes to. They have a mapped-out plan of where they will save, invest, or spend their money. These plans are usually coupled with short-term and long-term objectives that help them reach their goals—thinking long term in spite of temporary situations matters, especially in expat financial planning.
On the other hand, those who have no financial plans tend to let the chips fall where they may. They trust that they will always have enough again, leading to recklessness with spending. Being
Without a financial plan, it can be challenging to reach your long-term goals, such as retirement.
What is a financial plan?
A financial plan helps you manage your money in a way that will allow you to reach your goals. It gives you a timeline with certain milestones that you will need to achieve. At the core of every financial plan is budgeting.
Having a budget gives you the roadmap on how and when you should spend your money. A budget will encourage you to save money that goes towards retirement planning, debt repayment, or other goals that you may have.
In short, a financial plan is a path to follow, while a budget is a vehicle that takes you on that path. Be sure to create a budget that factors in your current salary, living expenses, existing debt, and any other financial considerations.
Financial planners can help you work out the details and kinks of your budget. They are trained to crunch numbers and figure out the best financial plan to achieve your goals faster. Advisors may even invest your savings for you, resulting in more significant returns of your savings. If you’re considering hiring one, be sure to scout a trusted and secure advisor.
Why do you need a financial plan?
Read on if you’re still not convinced that a financial plan is a must for everybody.
A financial plan helps you be ready for significant life events.
Unless you’re born with a silver spoon in your mouth, you probably won’t be able to buy a house on a whim. Buying a home, getting married, travelling, and even having children are big life events. These require financial freedom as nothing in life is free.
You might feel like you’re too young to start planning for the future, but it’s better to be prepared than to regret it later on. Moreover, your financial plan can be fluid. Even if you choose not to buy a house, you can reallocate that fund to other priorities that you may have!
Financial planning gives you peace of mind.
Knowing that your future is secured will take a load off your shoulders. You won’t be worried about being on the verge of bankruptcy due to sudden life changes. You and your loved ones will be prepared for any uncomfortable occurrences.
Following a financial plan when it comes to your expenses and savings leads to financial security. This will keep you confident for years and even the rest of your life!
These are just the highlights of financial planning. We recommend taking your time to research each facet as it can be a challenging process. If you have any questions, let us know in the comments.
