4 Reasons Why Financial Planning Is Essential

If you look elsewhere on this blog, and many other sites, you will see lots of tips to help you with your financial planning. Normally, we’re told what to do to plan our finances. But, we’re rarely told why this is so important. 

Financial Planning

Which is why I decided to write this article to prove to you why financial planning is essential. I’ve listed some of the key reasons below, feel free to have a read if you’re eager to know more:

For A Happy Retirement

One of the main reasons financial planning is so important is due to your retirement. At some point, you will stop working a full-time job and have to deal with retirement. This can be a difficult period in your life as a lot begins to change. Most of all, your financial situation gets very different. No longer do you get your healthy wage packet every month, as you aren’t working? Instead, you get a pension, but the amount you get depends on how well you planned. 

You see, you get a government pension, and you can also get a pension from your workplace. But, if you take financial planning seriously, you’ll also set up a private pension pot, which can earn you even more money in your retirement. Furthermore, if you’re planning your finances, then you’re bound to plan for the future. This means making investments and saving money specifically for your retirement. When the time comes, you can cash in on your investments and savings to give you more money to live on in retirement. If you haven’t planned things through, you may end up with an unhappy retirement as you’re always worrying about money. 

In Case Of Emergencies

Financial planning comes in handy when an emergency strikes. The world we live in is very unpredictable, nobody can tell what might happen at any given moment. A freak bolt of lightning n a storm may strike your house and cause damage to your roof, leading to costly repairs. If you haven’t been planning your finances, how are you going to pay for it? You may need to get a loan to help cover the costs, which can land you in debt. 

Likewise, what happens if you get into an accident and manage to seriously injure yourself. There are endless ways you can hurt yourself on a daily basis, something could happen that puts you in a hospital and demands high medical bills. Now what? Sure, you could get a personal injury lawyer to help recover some of the costs, but it still might not be enough. But, if you spent time planning your finances, you should have means in place to handle an emergency. You may have an emergency fund, or some savings stashed away specifically for situations like the ones I’ve mentioned. Now, you don’t have to worry as much as you’ve got things set up to use in case of emergencies. 

For Your Children’s Future

If you plan on having children, then you need to take financial planning very seriously. The way you handle your finances and the things you set in motion now will have a bearing on their life in the future. This applies to their future while you’re still here, and when you pass away. I know, it’s never nice to think about the latter, but it’s a fact of life; we all die at some point. So, planning our finances and tieing up investments and assets can be crucial for when we leave. Likewise, writing a will is a big part of financial planning as you decide where your wealth goes. So, if you do die, you leave your children with something to help them in their future. 

Now, back to the happier side of things when you’re alive and have a child. At some point, they’re going to grow up and might want to go to college or start learning to drive, or buy their first house. If you’re planning away, you will be ready for all of these things. You should start saving for your children, either with a savings account for them or a college tuition fund. In doing so, you prepare for these moments and make sure you’re financially capable of looking after them and helping them when they need it. 

To Improve Your Standard Of Living

Finally, financial planning is important as it can help you improve your standard of living. The mere concept of financial planning means you’re more aware of your finances and you’re taking steps to ensure you’re financially stable. This means you have less to worry about, and you’re fully in control of your income and expenditures. 

As a result, your standard of living improves as you avoid things like unmanageable debt and other money woes. You’ve planned everything out, you’ve budgeted, you’re tracking things and investing your money wisely; everything is great! Without financial planning, it’s a lot harder to have a good standard of living. You may overspend and not save, which can land you in a very tough situation. The problem with financial troubles is that they tend to get bigger and worse as time goes by. But, with financial planning, you can avoid them and live a lot happier. 

When you read through these four points, the arguments for financial planning are really strong. In fact, it begs the question, why wouldn’t you start planning your finances? Seriously, there are really no downsides to doing this at all, it will only serve to benefit you. What’s great about financial planning is that it benefits you now and later in life as well. Plus, it doesn’t just benefit you personally, it can benefit your family and children too. 

To end this piece I’ll ask you a few questions. Do you want a retirement where you worry about money all the time? Do you want an accident or emergency to completely wreck your finances? Do you want your kids to grow up with no financial support? And do you want to live with money troubles all the time? If you answer no to all of these questions, you better start getting aboard the financial planning bandwagon!

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