Financial Planning can help you at every stage of your life. Some important elements to consider in the financial planning process are contingency reserve, life and health insurance, investment horizon, etc. Let us see how financial planning can help you at different stages of your life.
If you’re in your 20s and recently started earning, you’re probably thinking of what to do with your money. Having a financial plan at this early stage can ensure that you start managing your savings holistically and plan your investments and indulgences in a balanced manner.
You can chart out all your goals and aspirations and make sure that you have a clear strategy to meet them. A planner can also help you understand how much you need to save in order to buy that dream house you’ve always wanted or to plan that world tour. Thus, a financial plan will act as a reality check in understanding how you need to plan your career and income streams to meet your goals and obtain financial security!
The early 30s is the time you start thinking about starting your own family or setting money aside for your children or parents.
Whatever may be the case, financial planning gets you started on the right note. You can even build a wealth corpus in the long run. Buying a house or funding your children’s higher education can be easily be met by shelling out a small portion towards saving every month. Picking the right investments towards your goals is the key.
Rising expenses, a growing family, and ageing parents are typical of someone in their 30s. It is the perfect time to take life insurance for your dependents and lock yourself in at a lower premium. Health and critical illness also need to be considered to ensure you don’t miss the bus. Even if you are yet to start investments, time is still on your side. It’s important to take advantage of every bonus and pay raise to grow your savings.
This stage of life usually comes with increased lifestyle expenses and career growth. You will need a solid plan to empower bolder financial decisions to compound your money before retirement and provide for your children’s higher education. However, at this stage, you would have already made many financial decisions in the past. So, a financial plan runs you through the old decisions to check the relevancy of your investment decisions in the current scenario. Mismatches call for a revamp of the investment structure. This includes surrendering unwanted insurance policies, exiting low-quality investments, and continuously scaling up investments.
When it comes to your 50s, the focus is planning for your retirement. By this stage, you would have provided adequately for your family and your retirement becomes your financial priority. You need to plan your post-retirement outflow and medical reserve. Financial planning will assess your retirement corpus and methods in which it can be strategized. Effectively managing your hard-earned money without taking much risk becomes paramount.
Financial planning adds value to your personal finance and puts you on track to achieve your dreams. It is a journey – timely reviews, course corrections, and restructuring are essential.