Financial
Planning plays a very important and crucial role in our life. Financial
Planning can be described as “Long Term Process of Wisely Managing Your
Finances so that you can achieve your Financial Goals & Dreams”. We all see many dreams for Our Children’s for
their higher education, marriage and their future prospects and also set many
goals for us, like buying a Dream home, new car, and vacation abroad. Retirement
planning is also important as we are moving from joint family to nuclear family.
We surely know our Goals and Dreams but never make serious attempt to fulfill the
same. In reality all our Goals and Dreams remain on paper only. Financial
Planning can solve many problems if we take it seriously and start working on
it. Generally it is seen that when time comes for any function or occasion people
redeem their money from investment which was planned for some other purpose.
Actually we become helpless when some emergency comes and take some instant
decision which can definitely spoil our financial freedom. Today it is the need
of the hour that one should make his/her financial plan as household, education
and other personal expenses are going up and we don’t know impact of inflation
in the longer run. Secondly loans and credit cards has become the part of life as
they are easily available. We never calculate the impact of interest which takes
away major part of our income. In other words our resources are limited but our
wants are much more.
Financial
Planning brings discipline in our saving and expenses. It helps us to set
realistic goals and also priorities the goals. We can easily reach to our
destination safely and timely if we set some basic rules for investment and act
accordingly. Most of us are not aware of priorities in our life. We all Invest
but without understanding our financial goals, risk involved and time horizon. The
lack of proper Financial Planning will add to the problems rather solving it.
Life Insurance, Health Insurance and Disability Insurance are the basic of
Financial Planning. At present less than 10% are insured and even those who are
insured are mostly underinsured. Living Short is always a major problem for the
Family but nowadays living long is also becoming more and more problematic. The
average life of an Indian is 67 yrs. at present and is increasing because of
the advancement of science and technology. Retirement Planning and Estate Planning
will also form part of our Financial Planning which is also been not planned.
Less than 1% prepares their WILL and this leads to litigations for the years.
We have to think very seriously for all this aspects in our life if we want to
live happily.
There is other
side of every investment which a common man does not understand like, economic
growth, inflation, tax implications etc. Today we are surrounded by many
Agents/Advisors who come to SELL the particular product such as Life Insurance,
Mutual Funds, P.P.F, N.S.C., Postal Schemes, F. D.’s and Direct Trading
Account. The most of the sells happens without understanding the future needs
of the Client. We all buy one or other product which may or may not fulfill our
desired financial goals. No product is good or bad but more important is, it
should match with our financial expectations. Financial Planning is the process
where product comes after the need analysis. This is the recent trend in India,
where in financial planner charges fees for making the financial plan and does
not push the product to earn the higher commission.
Financial planners offer unbiased fee
based advice which really can help to achieve financial goals. A CERTIFIED FINANCIAL PLANNERCM is “An individual who is Qualified,
Certified and Licensed” to give unbiased financial planning advice, free of
conflict of interest. They take care of all finance related matters just the
way a doctor takes care of all health related matters. They look at all
realistic financial goals, reviews current insurance and investments and then give
road map to achieve financial goals. They make written financial plan with
future recommendations in the best interest of client. They educate their clients
and update them with recent changes in the tax and other investment laws. They
follow a set ground rules of ethical standards and are governed by a neutral
body – Financial Planning Standards Boards India (FPSB India). It is also a
mandatory requirement to have ‘Continuous Education’ and to be updated with the
changes of the finance industry throughout the lifetime of practice as a Certified
Financial Planner. Financial Planning does not only help you in achieving your
dreams but it also gives peace of mind.
This article is first published at myiris.com on 2nd April'2012. below is the link of the same.
http://www.myiris.com/financial/storyShow.php?dir=2012/04/02/&fileR=20120402122830715
