If you want to accomplish any task, planning is the main factor that will make or break it. If you plan well, the task can be accomplished with ease, and if you fail to plan, the task that you set out to accomplish wouldn’t even see the light of the day.
Therefore, when it comes to your finances, planning and setting goals are all the more important.
Let us dive a bit deeper into what “financial health” is all about!
“Financial health” is the assessment of a person’s existing and prospective financial situation. It also necessitates planning for the efficient use of financial resources to achieve the person’s financial goals. It includes an investment plan, expense management, and a retirement plan on a personal basis.
What are the features of a good financial health plan?
-Simple: A good financial plan should always be simple so that it resonates the same in its financial structure. The goal should be that a layman should also be able to understand and manage the plan.
-Flexible: The financial plan made should have scope for easy adjustability, pertaining to the external factors.
-Liquidity: It’s also an essential part of financial planning to keep current assets in the form of money. This will facilitate the distribution and payment of various types of compensation, such as salaries, fees, and other types of compensation.
-Funds’ optimized usage: A financial plan should be able to make use of unused funds and assets to reap future benefits. It does not refer to money held aside for unanticipated events, but rather to assets that might be used otherwise.
-Foresight: A strategy that is developed without foresight is doomed to fail. To estimate risks and the requirement for liquid and other assets, foresight is required in planning. It might not be 100 percent correct, but it should be able to predict future dangers.
What are the benefits of Financial Planning?
The importance of a good financial plan cannot be ignored, and when you do have a plan, the benefits you get to avail are immense, some of which are:
-Achieve Your Financial Goals
Individuals can use financial planning to define and set goals for themselves. People’s lives have direction and purpose because of their goals. Individuals have something to focus on when they have clear goals in mind.
When it comes to living a stable and pleasurable life, people need to set financial goals. Money is often a means to assist people to attain their most treasured life goals. Therefore, personal economics is an intimate element of everyone’s life. It’s critical to strike a balance between your short-, medium-, and long-term financial goals.
-Get Emergency Prepared
Accidents, business losses, and sickness are unforeseeable. In these circumstances, you must put your health ahead of your finances. However, without a secure financial situation, obtaining the necessary assistance can be difficult, if not impossible. People are forced to borrow money or take out second loan from banks as a result of this.
One of the most commonly recommended products in a financial plan is an emergency fund. And if you’ve followed your financial plan, you’ll have one as well. After that, the emergency money can be spent.
-Improved Standard of Living
The money that you invest in financial products which relate to your financial goals can bring in a secondary or a tertiary income. This income can be used by you to pay off your loans or any outstanding debts that you have, which in turn will improve your standard of living, and your main source of income won’t be affected.
-Gain Financial Knowledge
This is one of the most important benefits that you will gain from making a financial plan or getting your financial plan made. Your financial plan ensures that you will always know about your current financial situation, and with an improved understanding of how to allocate the funds you receive or any additional income you gain.
-Achieve Financial Independence
With a financial plan that works for you, there will be no doubt that you will be in complete control of your finances. You can make many important life decisions that weren’t possible earlier. This could be moving to a new city or country, going on that fancy vacation you’ve been dreaming of, or pursuing higher education.
Bottom of the line
Modern times bring the need for financial planning that is seamless and adaptable to the needs of an individual. A well-defined plan always leads to an individual achieving their goals. Mastering your finances should be of prime importance and FinMapp can help you do the same, by being your “Virtual Financial Health Guide”