Financial Planning is critical to ensure you remain in control of your money for the present as well as the future. It covers a wide range of money related subjects that you must learn up if you want to continue to stay healthy financially.
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Listed below are some of the important topics about financial planning that one should know and how each of these works together and affecting one’s financial healthiness.
- Budgeting: The most elementary level of personal finance is how to allocate your fund so that your money is consistently in a positive flow. Budgeting is a process of allocating your money so that you come to know how much your spending is and where the money has gone. Your budgeting plan should always be based on your economic condition and you need to allocate the funds according to the priority of your needs.
- Expenses: After you have made a budget plan, you will have a better understanding and control of where your cash goes and what are the discretionary costs that you can tend to off.
- Debts: You may not be able to escape debt totally because you may get loans for buying a new car or home. When you do financial planning, you should take into consideration your debts so that you have plans to get rid of them.
- Savings: Allocating funds into saving accounts is an important step in financial planning. You may need money for emergency needs, like your kid’s educational fees, etc. With fewer companies offering full ‘pension plans’ and the vulnerability of ‘social security’, it has important to plan savings that you can set aside to be utilized during the emergency time.
- Insurance: Major illnesses, accidents, disaster, and many other incidents come to our life without prior warning and they cause a sudden need for big money, which our emergency fund may not be adequate to resolve them. Here, comes the significance of insurance in our financial planning. Insurance ought to be incorporated into your financial plan to protect to your family members against unexpected events such as illness or loss of income sources because of death.
- Retirement Planning: The quality of life you want after your retirement will depend on your present contribution. Therefore, you have to include a retirement plan when you perform financial planning.