What is Financial Planning and why do you need it

Two business partnership coworkers analysis strategy and gesturing with discussing a financial planning graph and company budget during a budget meeting in office room.

Financial planning is crucial to help an individual take better financial decisions and attain their financial goals. Getting a professional financial advisor to handle your money can lead to better success. Here are certain things you need to know about financial planning. Everyone has certain financial goals at different stages of life. If you are in your early 20s, you may want to save for a fancy vacation or to buy a vehicle. Individuals in their 30s and 40s may be planning to buy a house or accumulate money for their children’s education or marriage. Older people may be planning their retirement. Irrespective of your goal, financial planning is crucial for stability and contentment in life.
What is Financial Planning?
Financial planning entails looking comprehensively at one’s finances and creating a plan to achieve specific financial goals. It involves various steps, including estimating your current and future income, investment planning, tax planning, building an emergency fund, planning for retirement, insurance, etc.
While individuals can plan their finances, it is best to onboard a professional financial planner for optimal success. The National Institute of Securities Markets (NISM) gives necessary certifications which are prescribed by SEBI for investment advisors, who give professional and unbiased financial planning advice to their clients to achieve their financial goals.

How Does a Financial Planner Work on Your Finances?
Financial planning services use multiple methods to help you meet your financial goals. A financial planner uses a meticulous approach to help individuals meet their financial goals. Let me take you through the various aspects of preparing a financial plan.

  1. Identifying Your Financial Goals
    The first thing a financial planner will do is discuss your financial goals. This will include your short-term, medium-term, and long-term financial objectives. They will help you craft clear, quantifiable, and achievable goals. They will then discuss the timeline for these goals and set your expectations right.
  2. Estimating Your Financial Situation
    Once your goals are in place, a financial planner will look at your current financial situation. This will entail fleshing out all sources of income, expenses, assets, and liabilities. They will then look at your future earning potential so that they can arrive at a realistic financial plan to meet your goals.
  3. Analyze Your Risk Attitude
    Your financial plan will depend on your risk capacity and tolerance. Your financial planner will help you estimate your risk appetite and the amount of risk you can take.
  4. Develop a Financial Plan
    A professional financial planner will help you develop a comprehensive financial plan that aligns with your
    financial goals and risk appetite based on all the information collected. They will create a diversified portfolio and advise you on how you can manage your investments, tax and assets. You can then invest accordingly.
  5. Review Your Plan
    A financial planner’s role does not stop simply at planning. They will also help you review your finances periodically and make changes depending on how your portfolio has performed and your future goals.
    If you want to be sure that you can achieve your financial goals with success, you should consider getting a professional financial planner. As STEPS, Geojit’s financial planning division has a team of highly-skilled Certified Financial Planners, you can reach out to us for assistance in your financial journey.
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