Why Personal Financial Planning?

Dear Readers,

Good day!
Today’s topic is about personal financial planning.

This reading covers:

  1. What is personal financial planning?
  2. The importance of personal financial planning.
  3. Financial Planning Process

What is Personal Financial Planning?

Personal financial planning is a process of setting objectives, assessing assets and resources, estimating future financial needs, and making plans to achieve your personal monetary goals (Yong, 2018). Financial planning plays important role to shape our financial life cycle needs, such as purchasing an home, savings for child’s education, supporting aging parents and preparing for retirement. Careful planning can help to prioritize our work to achieve our long-term goals, and protect us against the unexpected.

5 golden rules of financial planning

(Extracted from The Economic Times, 2019)

Importance of Personal Financial Planning

Based on Pauline Yong (2018), there are three most important factors that must be taken into account while having personal financial planning, i.e inflation level, changing lifestyles and contingencies.

First, our financial planning must be able to deal with the impact of inflation in the market, especially in phases like retirement when expenses continue but income dries up.

Second, with a higher disposable income, it is common for individuals to upgrade their standard living. Hence, financial planning has a role to play in helping individuals both upgrade and maintain their lifestyle.

Last but not least, we may need to incorporate factor to cope with contingencies like medical emergencies or unplanned expenditure. This will help us to prepare our cash flow in advance.

5 golden rules of financial planning

(Extracted from The Economic Times, 2019)

Financial Planning is a Process

Financial Planning Process

(Referenced from Yong, 2018)

Like and share the page so that I know there are readers interested in the topic, and I will share more information regarding this topic in future.

Thank you for your support and have a nice day!

References:

The Economic Times. (2019). 5 golden rules of financial planning. [online] Available at: https://economictimes.indiatimes.com/wealth/plan/5-golden-rules-of-financial-planning/articleshow/50149594.cms [Accessed 16 Sep. 2019].

Yong, P. (2018). I love financial planning. Johor Bahru, Johor: Sigma Wealth.

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