Do you need financial plan?

Yes - if you have an income, a family or planning to have one in the future, retirement dreams, and for many other financial reasons / goals that are unique to you. No one can predict the future but one can certainly be better prepared for it. An effective financial plan will make sure that you are financially prepared to deal with the unexpected events and stormy times. If you dont have one, you are more likely to end up in a financial mess. On the contrary, if you have one and the recommendations thereon have been executed, most of your financial goals will be satisfactorily met. A good financial plan can alert you to changes that must be made to make sure a smooth transition through lifes financial phases, such as decreasing spending or changing asset allocation.

By developing a financial plan you and your family:

• Will have a better understanding of your current financial position.
• Determine attainable retirement, education, insurance, and other financial goals.
• Review goals, funding strategies, and alternatives to balance all goals.
• Have the necessary financial resources set aside to fund your goals as they occur.
• Reduce the effects of unexpected events such as disability, premature death etc.

You need not be very rich to have a financial plan. No matter how much you earn and at what age, a plan is important to make your life easier. As your financial situation influences almost every aspect of your life, a regular financial plan can help give you peace of mind and protect you from unforeseen, unfavorable situations. Once you have a working personal financial plan, you can use it to make informed financial choices. Having a good financial plan will allow you an over view of what you can afford. It will allow you to analyze your wants versus your needs. It also provides you a way to see how to avoid major financial mistakes in the future.

Risks of not having a financial plan:

• You may be able to achieve what you want today but might not be able to achieve what you need few years down the line. Say, if you buy a new car now, you might not have enough funds later to buy your dream home.
• You may not see the big picture. Say, you may grow your wealth by making good investment choices but end up being tax inefficient and pay more taxes than you need to.
• You may take a short-term view of an opportunity and make rushed financial decisions, or fall into some scam trap. Worst of all, you may end up doing nothing (and just thinking of doing something) and never achieve your financial goals.
• You might become a victim of mis-selling and build a corpus of investment products that neither suits your financial needs nor your risk profile.
• You are very much likely to worry more about money and financial security. You may not know where you are today and where are you heading for.

Tips for Effective Financial Plan

• Be realistic with your investment returns; dont plan to outperform the markets.
• Account for market risk and dont assume the same return to repeat every year.  
• Dont forget to plan for inflation, taxes and your financial planners fees.
• Review your financial plan regularly to see if you are on track or need any changes in the plan.

The need for financial plan is all the more very important in the turbulent economic times of today. If you dont have one till now, dont delay any more and Get it Now. Dont be self-satisfied that you will be okay whatever happens. Face the reality. Unless you develop a financial plan early, it will be too late.