06/09/2020
THE DOS AND DON’TS OF FINANCIAL PLANNING -
Financial planning is also one of the most important and central processes that can help you grow financially and move closer to your goals. Try and keep these dos and don’ts in mind -
1. Listing and prioritizing one’s goals -
Do - Make sure you list down each & every small and big goal you have in life. Not only to focus on the bigger goals but include the smaller and more achievable goals to your list as well, so that the journey ahead comes with more validation.
Don’t - One of the biggest mistakes many people make at this step of financial planning is to overlook the importance of correct prioritization of goals. Ensure that your list is well thought of when you pen it down for the first time.
2. Tracking expenses -
Do - Financial planning and tracking involve keeping a detailed account of your spending and expenses. Be extremely honest in this process. Count every expense that you incur.
Don’t - Don’t estimate vaguely, always go by the statistics. In the process of financial planning and budgeting, estimations play a major role. Also, do take note of any dues, pending loans, etc. that might hit your account in the coming months, to avoid inaccurate estimations.
3. Creating an emergency fund -
Do - Financial Planning will only work if everything goes according to the plan. One of the biggest things that can unexpectedly go wrong is extra spending due to an emergency. Which is why, it is advisable to always have an emergency fund to take care of any unforeseen situation.
Don’t - Don’t overlook your emergency fund options. Take medical insurance for instance, it will not only secure you of any medical emergency but will also come handy during retirement.
4. Retirement planning -
Do - An important factor to take into account in financial planning is retirement. If you plan and save wisely now, your post-retirement life will be tension free and financially stable.
Don’t- Do not delay planning for your retirement. Regardless of your age, it is never too early to start planning for retirement. In fact, the sooner you start, the more time you have on hand to save up!
5. Dealing with emotional and mental pressures -
Do - While noting down the list of goals you have and estimating your expenditure, also consider your happiness index that will roll along with it. Do keep in mind that finances are one of the leading reasons for anxiety and hence, it becomes imperative to also keep some achievable goals.
Don’t - Do not get emotional or anxious about your finances. Do not come up with a plan that is extremely difficult to follow and will only give returns in the long run.
6. Overspending and re-visiting the plan -
Do - Ideally, stick to the plan that you have come up with. In case, you ever feel that your current financial standing and goals no longer align with your plan, revisit the plan and amend it accordingly.
Don’t - Do not overspend. Stay within the brackets of spending that the plan allows. Your daily and monthly expenditure must be closely tracked so you do not end up spending more than you should.
To sum it up -
Financial planning remains one of the central processes to attain financial freedom. Accuracy and numbers can make or break your game, which is why it is important to be careful while devising a plan. It is also equally important to keep tracking, following, and revising the plan from time to time.
