Why investors think financial planning is only for rich people?
As a Financial Planner this question is bugging me for a while. So I started my work to find the answer and now I am here.
Now, I want to rephrase this question.
"Why financial planning is NOT only for rich people?"
First of all you need to understand the purpose of financial planning. Financial planning is like a proactive process which helps us to overcome the impact of inflation and helps us to achieve our financial goals. Everyone has a financial goal to achieve. Whether your financial goal is small or big, it doesn't matter.
So why are you avoiding financial planning?
Are you avoiding financial planning because you
don't have enough money? Or
Can't you afford a financial planner? Or
Are you feeling like you don't need financial planning?
If you think financial planning is not for you, then you should read this.
4 reasons: why financial planning is NOT only for rich people.
1. To accomplish your goals:
Do you have a financial goal?
You cannot say "no" because everyone has a financial goal.
You may have goals like,
- Buying a new house
- Buying a new vehicle
- Long vacation
- Your marriage
- Your children's education
- Your children's marriage
- Happy retirement life
If you have one of these financial goals to achieve, you need proper planning to achieve them.
Goals without planning are like wandering in a deserted island.
For example, if you are saving part of your income to buy your own house, it will take years to reach your goal or you might spend that money for some other emergency expenses.
But, if you have proper financial planning, you have emergency savings to manage your other expenses. So, you can continue to pursue your financial goal without any interruption.
In financial planning your income will be saved and invested according to your plans. A certified financial planner will help you to accomplish your goals. If you think you cannot afford financial planner or don't know how to find a financial planner for you, you can go for initial complementary consultation.
There are some financial planners who provide complementary consultation and give you advice on financial planning. It will help you to choose the right financial planner for you to accomplish your financial goals.
2. Control your expenses:
Everyone has different needs and different reasons to spend their money.
Some of us will buy things which we need, some of us will buy things though we already have one (e.g. Mobile Phones).
But financial Planning will prevent us from spending our money on unwanted things.
By having financial plan you can,
- Control unwanted expenses
- Control your budget
- Helps you to save more
- Helps you to invest your savings properly and
- Helps you to increase the growth of your wealth
For example, just imagine that you have a list of goals to achieve. Sometimes to achieve your goals, you might have to sacrifice your another goal.
That's why I am saying common people like us need financial planning desperately more than rich people.
Having financial plan not only control your expenses and also helps you to grow your wealth.
If you know how to control your expenses, it is also part of your saving.
3. Look after your loved ones life:
"Live life for the moment because everything else is uncertain." - Louis Tomlinson
Every moment of our life is uncertain; we don't know what will happen at the moment. I am not telling this to scare you, but it is the truth.
That's why it is important to have financial plan when it is possible.
What if you lose your job?
What if you get hospitalized for long?
What if you are not there to take care of your family, when they need your help financially?
You have the responsibilities to fulfill your family's dream. Don't let any uncertain situation crush their dreams.
Having financial planning will help you to fulfill your responsibilities; even if you are not with them you can support your family financially.
It will be a big support to you and your family.
4. To live a happy retirement life:
Most of the parents in India depend upon their children after their retirement.
Though they don't want to depend on their children, they don't have a choice, and it's because they don't save for themselves.
All these days you have been working for your family, and you might have forgotten to save something for yourself. But you can overcome this situation, if you have a proper financial plan.
After your retirement, you need to pay some bills without any income. Or
You might have dreamed about where to spend your retirement life.
You don't need to invest large amount of money to reach your goals. Start investment when you get your pay cheque, and it doesn't have to be a large amount. Small investment for long time can help you to make your dream come true.
It is up to you, whether you are going to be one of the parents who is dependent on their children or the one who are going to live their independent life.
To live your happy retirement, you don't have to save too much. All you have to do is save and invest as soon as possible.
Whether you are rich or not, you still have your own goals to achieve. Whether you have a small dream or big dream still you can accomplish them.
From my experience I learnt that everyone needs financial planning. There is no such a thing “Financial planning is only for a rich people.”
All you need is a financial plan and which can help you to pursue your financial goals. So dream big and live your life without any sacrifices.
(The author is Ramalingam.K an MBA (Finance) and Certified Financial Planner. He is the Director & Chief Financial Planner of Holistic Investment Planners (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He can be reached at firstname.lastname@example.org)