Financial Planning is all about budgeting, planning, implementing and executing to achieve the desired goal. Let’s assume you are in your 20s and unmarried and this is how your plan should be. Let’s understand how you can plan your goals and what are the ways in which you can achieve that.
– Helps you to have a road map: It gives you an idea on how your expenses will be tracked. If you have a road map with you for all your future expenses, it would be easy for you to track.
– Better Debt Management: A proper financial plan will address your monthly interest payments. This will help you learn your financial performance better.
– Cost control: Most important benefit of financial planning is ability to cut costs. As you have planned everything prior, you are very much aware about all your expenses and also if not necessary you can reduce it or wave off.
– Tax compliance: Financial Planning helps estimates and adjust taxes. Failure to pay taxes can lead to penalties.
– Financial Resources: It will help you figure out the investment options to achieve the goals in a strategic way.
Do you consider FD as an investment? I must stop you here, no it’s not an investment. Investment is something which gives you returns more than inflation. FDs are considered as saving and not investment.
Investing is process of buying assets that increase the value over time and provide return in form of income payments or capital gains. In a large investing can also be about spending time or money to improve your own life or the lives of others.
In the most straightforward sense, investing works when you buy an asset at low price and sell it at a higher price. This kind of return on your investment called capital gain. Earning returns by selling assets for a profit—or realising your capital gains is one way to make money investing.
– Pooja Patel, CFP CM