9 reasons why you should do Personal Financial Planning - Finlabs India

Financial Planning is a systematic way to create a roadmap of your personal finance in such a manner
that you are able to take care of your future goals, protection needs and other aspects of personal

Ten Reasons why Financial Planning is important

1. Investment Aggregation:

As an investor, you would have invested in various products lie stocks, mutual funds, bank deposits, post
office products, gold etc. The details of these investments including the account number, nominee
details, valuation etc. are often not stored in one place. Financial Planning helps you to gather and put
all if these together in one single place for better management.

2. Better Budgeting

Once of the first exercises you do is to write down your income and expenses. These help you to create
a proper budget and helps in efficient utilization of resources. E.g. For a family looking to increase the
amount it wants to save every month, it can look at cutting down on the unnecessary expenses.

3. Avoid keeping money in dead investments

The traditional equation of Savings was Income – Expenses = Savings (Which were often not invested in
time). Financial Planning helps you to turn over this equation into Income – Investments = Expenses.
Since you have budgeted for your expenses, you can make an investment as soon as you receive your

4. Identify your goals

The first step towards achieving the important milestones in your life is to identify them and put a
timeline and amount to it. Research has identified that your efforts and motivation will be focused once
you have a tangible goal in sight. It also helps the advisor nudge you to make proper investments

5. Monitor your investments

The advisor helps you to review you portfolio on a regular basis. This ensures that if there are any junk
investments, they can be reallocated to better performing assets.

6. Invest as per your risk profile

Investing as per your risk profile helps you to stay invested for a longer period of time without worrying
about market movements and more importantly it gives you peace of mind. E.g. if you are a moderate
investor, it is better to have a mix of investments that give assured returns and market linked returns

7. Have an emergency fund in place

One of the first steps of implementing a Financial Plan is to create an emergency fund which helps you
to take are of any contingency that might come. An emergency fund comes in handy in difficult
situations like the current one where many people had salary cuts and some of the people also lost jobs

8. Take care of Protection Needs

A Financial Plan is not just about investments. A Financial Advisor will also help you to buy proper
insurance products like term life insurance, medi-claim for all the members of the house and also other
insurance like personal accident, critical ill ness etc. In case a family member is hospitalized, the health
policy can be used to pay the hospital bills. Similarly, a term cover help a family tide over the financial
loss in case of death of the earning member of the family

9. Helps you focus on your job and career

Since you have planned for your future, you can devote undivided attention to your career and job. This
ensures you excel both in your professional life and also your financial life

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