Is Financial Planning Key to Success in Life

We need a plan at any stage in life, as a plan clearly shows us a route, a cause in life that we have predetermined to follow in a period of time or for life. The plan is set down as a model on which our goals are based and which will be a basis for comparing our actions and achievements over a period of time.

Who needs to undertake financial planning?

The answer is that both individuals and businesses need to engage and constantly do financial planning. Just as a lack of a good financial plan has introduced and led to failure of most businesses, lack of financial planning has also led to the failure/distress or bankruptcy of most individuals both young and old.

This goes on to point to the fact that that financial planning as a culture should be encouraged in each individual and should be undertaken by both young and old as much as possible. Financial planning at the individual level is different from the retirement planning or investment plans for future possible retirement.

What are the basics of financial planning?

Basically the process of financial planning involves a series of steps, which can be undertaken by anyone with interest on it. This covers the following steps, setting a broad set of goals comprising all /as many aspects of the goals for that period of our individual life.

Next is that you take stock or re-examine your current position and compare this with your set goals . This study or analysis of the present situation will help to point you to some gaps between your planned goals that will need to be filled and your current achieved goal. In this analysis you will closely examine the goal , gaps and current financial position and consciously need to find out whether or not you will be able to meet your plans in the period or not, what possible cash shortages or surpluses may occur in the period covered by the review. Most times financial plans are compiled into budgets and cash/fund statements with notes.

The process will alert you to decide in advance what you may do with any cash surplus and to compare the alternative investment options to be considered, thereby maximising your wealth. On the hand where a shortage is expected you may have to seek ways to cut down on your planned costs or expenditure or postpone some of your investments to the future.