If it is your honest desire to build wealth, than you need to spend some time thinking about the idea of planning your finances properly. For the serious wealth builder, financial planning begins today!
So Why is Financial Planning Important?
The straight answer is Financial planning helps you identify your money related goals and then helps you create a balanced plan to meet those goals. To be honest with you, I am one of those who did not begin to think of financial planning until much later. I strongly believe that parents should introduce the concept of financial planning at an early stage.
When I first began to look around for some financial planning help, I can across a ton of information regarding financial planning and investment. But ultimately, the best financial planning tool I discovered was a resource that explained 5 reasons why financial planning was important.
Here are five compelling reasons why financial planning is important.
1. The Money You Make: When you plan your finances properly, you get to the point, where it becomes a piece of cake to understand how much more you’re really making, how much more you probably need to make and what you’d need for tax payments. Good financial planning also helps you keep track of other monthly expenditures and savings that are available.
When I started planning my finances, I quickly realized that I wasn’t making as much as I really needed to make in order to be properly protected etc. The process made me to start thinking objectively about how I could increase my income.
2. Improve Your Cash Flow: You can do so much when you have cash on hand. I was able to increase my cash flows by carefully monitoring how I spent my monies. I was able to even track down to what day of week I spent more money.
Sure this may sound a bit overbearing for you but I assure you that through financial planning, you can plan your taxes properly, be more prudent, and develop spending and budgeting habits that will help you keep more of your hard earned cash.
3 Build Your Capital Reserves: As you cash flow increases, you will find that you begin to have increased capital as well. I don’t know about you, but for me, the moment I began having more money on hand at the end of the month, everything began to change. I became more confident as a husband. I became more in touch with myself. I began to consider other business opportunities even though the capital I had for those was little. But above all, I was now in the position to provide fully for my family’s financial security. And that takes me to my next point.
4. Ensure Your Family’s Security: Any good financial planning system will most likely begin with this aspect. The truth is, we all need to be protected. If you’re really serious about building wealth, then you must make sure to have insurance protection in the brig four areas: Health, Life, Auto and Home .
When you having the proper insurance coverage and policies in place, it can put your mind to rest, knowing that if anything were to happen today, your family is covered.
I remembered back in 2006, when I became a Financial Service Representative for one of America’s Largest financial companies- Primerica Financial Services. One of the first things we learned was the importance of the proper amount of protection. I did not learn the lesson well enough. So when 2011 came along, and I lost my mom unexpectedly, our entire family was caught with our pants down. Complete financial planning will make sure you’re protected properly.
5. Investing to Build Wealth : A well designed financial plan takes into consideration your personal circumstances, financial objectives and how much risk you can handle. The right plan will advise you on what to invest in and what not to invest in.
As always, I ask that you please leave your comment with possible feedback in the box provided below. If you’ve had any personal experience, please share them with me.