The importance of financial planning is unparalleled. In fact, it may be the thin line that may define success or failure. Everybody needs a financial plan because without it, how can you define and achieve your financial goals? How can you establish a good financial foundation, retire early, and live life comfortably and worthily? Planning, just like in most aspects in life, is essential and if you won’t plan and manage your finances well, it will create a life of its own and get out of hand.
Nearly 90% of the people all over the world have no financial plan. These people normally end up working during at their 50’s or even 60’s maximizing their productive years, and worse, some even work even beyond their retirement. They’ve got no choice, they have to work in order to earn an income and support their needs and their lifestyle. The other 10% retire early, establish good and multiple income generating sources, and no longer work for the money. In fact, they become these so called money magnets because money gets attracted to them, money just enter their pockets and equities without working hard for it. The different between the two boils down to financial planning. The successful 10% knew what they wanted in life, how to do it, and when to achieve it, the 90% probably got contented by their meager salary or probably aren’t willing to exert a little more effort in planning and managing their finances well.
So how does financial planning really make the difference? Here are some reasons why:
1.) You can be more efficient with your money. If you plan your finances well, you’ll know what things are important to you (such as needs) and what are the things that you can either put aside for a while or things that you really don’t need. Without financial planning, you could spend a lot without thinking and in the end could make you wonder where did all your money go.
2.) You’ll realize the importance of money even more. Some people think that since money is used as a medium of exchange, it must be spent. These kind of people normally doesn’t have any plans for their money and in the long run are the ones who end up struggling and without any savings and investments. Since financial planning can make you pinpoint the things that really matters a lot, you get to budget your money better and put them on things that will be beneficial to you, not just provide temporary satisfaction. Money may not be everything in this world but heck it is a very important thing.
3.) Financial planning can teach you discipline. Managing your finances isn’t easy. It may require you to sacrifice and give up your wants for a greater goal. Impulsive buying is one activity that most people struggle on. Everybody is wired to spend but not everybody can save. Saving requires discipline and having a financial plan can surely help. A financial plan makes things concrete for you thus pushing and motivate you to keep from spending and put your money on where it needs to be.
4.) It can increase financial IQ and practical knowledge. If you commit to financial planning, you are most likely going to research and bump into things that can help you, some new ideas that may make you adjust your plan or simply present are entirely a better one. People who are successful are normally people who have good finances, they are either financially secured, wealthy, or are earning a good amount of income. Either way, these people knew something that average and poor people don’t and that all boils down to knowledge. These people most likely knew how to handle finances well.
5.) It will lead you to more financial planning and management opportunities and ideas. There is a saying that like begets like. Such saying is somewhat true. If your focus towards financial planning is sharp, opportunities will present themselves either through ideas just popping out from your head or you get attracted to wealth builder seminars, financial planning and management lectures, and the like. It’s something that science may not be able to explain but believe it, if you focus and strive to achieve it, fate would be so good on you and give you something more than what you bargained for. Just stay open for opportunities.