This is 1st of a 5 post Introductory Series.
The posts here will be about different topics of personal finance, but certainly they will be relating to a core topic of Financial Health (FH). FH is as necessary as bodily health or Physical Health. Being healthy physically, enables you to carry out your day to day tasks with confidence and agility and you can enjoy the world around you. In the same way, if your FH is in order, you get peace of mind regarding your monetary present as well as future. It’ll assure you that your future is financially secure as long as you live and then after your family’s if you’re not around.
Now, what do you need to keep your PH at good level? Good eating habits, excercises, shedding off bad habits. And you use these things in an organised way and call it a diet. Similarly, you use sensible spending habits, good investments, adequate insurance etc to keep your FH in check. And the way you use them to make it most fruitful to you is called Financial Planning (FP). Thus, FP is like a diet for FH. You need to adopt a particular diet plan to live a long and healthy life. The same goes for FP too.
You see, there are these many similarities between Physical and Financial Health and we can even draw a few more. But let’s get ahead with our topic here. Why Financial Planning is necessary? Well, It’s so to counter inflation eating away your savings, to counter financial stretch that may arise due to an unfortunate event, to counter a medical expense that can gobble up your hard earned money and finally, to live a peaceful and happy retirement life.
And how would you do it? That’s important. As people have now started to become aware of Financial Planning, there is a rising number of Financial Planners too. These are people or group of people that you will find in Banks, NBFCs, Investment Firms and even individual offices. They will charge you for their services. There is nothing wrong in this approach. And it will be a necessity for the people who run large businesses big enough not to have adequate time to plan for their personal finances themselves.
But if you have manageable finances and do such a work that you could get few hours spared for yourself, then I would recommend using a different approach. DIY. Do It Yourself. Create a Financial Plan that suits you the most.
That’s because, in my opinion, if anyone can make a proper Financial Plan for someone, that would be the person himself. And that is because only that person knows his and his family’s financial delicacies. It’s not easy though. You will need to acquire as much knowledge regarding investments, term insurance, health insurance etc…as you can and read a lot. Read, research, deduce and then apply. As you will start to understand various FP components and get enough knowledge, you will be able to manage your own finances and create a Financial Plan that will work in your favour for a long time.
So, that’s it for now. A few related introductions will follow.
Will be back soon…