FINANCIAL PLANNING HAS BECOME MOST IMPORTANT-WHY?

Without planning nothing is possible in this world. And the effective planning is that only which has done on time (before the starting act). Financial planning is very necessary for every paid person to keep in mind the current situation. Everyone can earn money. But earning money cannot assure completion of your financial goals in present and future. Planning is a most important tool to manage the money in the most effective way that it may fulfill your all needs in all possible manners.

What does mean by Financial Planning: Everyone has some future goals which he/she would like to reach in a time period. Financial planning is the management of present’s resources in the direction of future financial goals.

For example: if I plan to purchase a home in 5 years I have to plan for that goal. I have to save money, invest that money to get good returns as I will effort for big lump sum to get a home. This planning is called financial planning.

Why it's necessary in this period: Yes this is very necessary and important in this time. In past it was not very necessary. But in this time if one doesn’t do it he/she will never be financially sound even good earning.

The future has never been seen by anyone but this is sure that we are going ahead in time. In every family there may be 2, 3, 4, 5 or more person. Among them it may be possible that all are earning or it is also possible that one is earning and rest all are depending on one. But financial planning  is that  process of management of present resources which assure you and your family to achieve what you want to have in future. One has to manage his income according to following formula:

INCOME = EXPENSES +SAVING

SAVING = SURPLUS FUND + INVESTMENT

Income should be divided into expenses according to budget and savings. Further savings should be divided into the surplus fund to meet unnecessary expenses and investment to achieve future goals.

Every earned person should make a monthly budget and should spend according to budget to ignore unnecessary expenses and keep a surplus fund aside to meet unexpected expenses. Along this one has to invest a part of his earning in short or long term investment vehicle to achieve his short term or long term goals which have to be according financial planning.