What is the Main Objective of Financial Planning

What is the Main Objective of Financial Planning?

At different times in life, people’s income and expenses change. You can take examples of marriage, having a child, etc. In these stages of life, your expenses will increase and you also have more responsibilities to fulfill.

As you transition through the different stages in life, you need to take proper care of your financial health. It’s essential to ensure that you don’t have to face any financial shocks and hiccups.

Importance of Financial Planning To manage your finances in a better manner, you need a customized financial plan which can only be crafted with help of financial planning.

Also Read: 10 Steps of Successful Financial Planning Financial Planning refers to the process of identifying your present financial standing, establishing key financial goals, and outlining a strategy for how your assets and investments help achieve those goals.

For instance, if you want to accumulate a corpus amount of Rs 15 lakh for your daughter’s marriage by the time she turns 25. To achieve this much amount, putting in financial planning is extremely essential.

Financial Planning – What It Brings for You? You can’t ignore the importance of financial planning in India. It helps achieve key financial goals.

1. Wealth Creation You must have some financial goals in life such as buying a home or car, going for a dream vacation, children’s marriage, etc., and to meet all these goals, you are required to build wealth. There are also some obligations in life that you must fulfill. Financial planning helps you to achieve all your goals in life.

2. Child’s Education Education nowadays has become extremely expensive and it’s further going to rise. That’s why you need to plan your finances well to meet the education expenses for your children.

With financial planning, you can easily compute the amount that you will want for your children’s education and then accordingly start investing.

3. Retirement Planning To plan your retirement, it’s advisable to start investing as soon as you begin earning. To enjoy your golden years after retirement, you need to start planning from an early stage in life. By

start investing early, you can take benefit from the power of compounding which helps build a huge corpus for your retirement.

4. Better standard of living Usually, people have at thinking that they have to put off their standard of living to pay for loan EMI’s and monthly bills. But with a good-fitting financial plan, you don’t need to give up your living standard. With proper financial planning, you can achieve goals while maintaining a decent living standard.

5. Ready to Face Emergencies A financial plan suggests you create an emergency fund. Under this fund, you must keep a fund that can meet your family’s expenses for at least 8-12 months. This way, you don’t need to worry about fulfilling expenses, during any financial emergency such as job loss. This contingency or emergency fund helps you pay for various expenses during the testing time like the COVID-19 crisis.

6. Tax Saving Every year, you pay a substantial amount towards tax. But with help of proper financial planning, you can reduce your taxable amount legally. In India, The Income Tax Act provides some provisions that help reduce your tax outgo. There are investment options that offer high returns and also help save tax. ELSS Mutual funds, Public Provident Fund, National Savings Certificate, National Pension Scheme, and 5-years Bank Fixed Deposit are some of the top investment options that help save tax plus offer high returns.

Read This: Safe Investments that Offer High Returns Also, you can consult with a financial planner to get guidance on how you can start with financial planning.