Financial Planning process starts from understanding & examining your current situation, gathering relevant financial information, setting up financial goals (short term & long term) and finalizing a plan in detail. This will cover how to meet the financial goals in the current situation and future plans.
Step by Step approach - Financial Planning Process
Set specific and quantifiable goals You should have a specific targets of what you want to achieve and when you want to achieve it. Have measurable goals as it will be simple for you to understand whether you achieved your goals or not.
Analyze and understand every financial decision Every decisions are interrelated and one has impact on other financial decisions. A comprehensive plan is required otherwise it will be difficult to reach financial goals.
Re-evaluate your financial situation periodically Apart from planning, you need to monitor and check your financial position regularly. Owing to change in income levels/expenses/circumstances, such as a marriage, kids, house purchase or increase in income. As Financial Planning is dynamic in nature, changes are required in your planning periodically, so that you are on track with your long-term goals.
Start your financial planning early The early you start your planning, the better it is for you. Developing well Financial Planning habits at an early age such as saving, budgeting, investing will prepare you to meet life changes and handle any kind of situation/emergencies.
Be ready for the unexpected - Know all risk Inflation, stock market movements, interest rates all effects your financial goals and these are beyond your control. So be prepared for this kind of unexpected situations.
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