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Financial Planning - Why it is so Important

Updated on July 13, 2011

Financial Planning

Financial planning is identifying your goals and developing strategies for meeting them. It a great step in becoming more financially secure, which is something we all want as a goal. It is good for us to realistically look forward to the future. We all have imagined the life we would like to have, and often the money that it takes to get to that point is a lot more than we currently have.

The first step is to look at the choices you are currently making financially. Start with evaluating your present situation. It is critical to taking even baby steps in the right direction. If you do not do this, it is very easy to just make decisions randomly that aren't moving you toward your goals in an effective manner. You may even make some decisions that are actually in opposition to you reaching your deeper goals for your future. Now is the time to begin, even if after looking back it was later than you would have liked, ideally.

Reasons to Plan ahead Financially

Financial planning is important no matter where you are at in life. Some have started their financial planning as soon as they started having any income at all. Some people don't really realize the importance until much later in life, even in the retirement years. Regardless of where you are at in life, it isn't too late, and others can vouch for that fact. Financial planning is an ongoing process for a few reasons. Things change in life, and your financial situation can change as well for the better or worse. Again, regardless it is wise to move forward. By looking honestly at your progress and situation, you can revise if need be and move forward and get to your goals more quickly.

By not planning, there are financial risks you are taking. People have big expenses come up like purchasing a home, or paying for college tuition. Some people have to revise retirement plans sometimes because they didn't plan ahead, and their investments are not what they could have been if they had planned ahead. One scenario that can get us really thinking ahead is to consider what situation your family would be in if you should die unexpectedly. Could they live comfortably and deal with everything if the worst should happen? Financial planning takes these things into consideration.

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Key Steps

Your financial plan will include strategies as stated before, which is for defining the steps you need to take to get the money to pay for what you want in life.

Define what your goals will cost, as much as you are able. Put these sums to paper. Consider the assets you already have and evaluate their performance currently. Make any adjustments that are necessary. Sometimes over time, our goals and visions become a bit more defined and clear. Find smart ways to increase the amount you are investing. Make your selections based on what you come up with and select the best investments you can. You are on your way to a smarter and better financial future.

Some great, no nonsense tips.

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    • arthurchappell profile image

      arthurchappell 6 years ago from Manchester, England

      shrewd advice - very practical

    • oceansnsunsets profile image
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      Paula 6 years ago from The Midwest, USA

      Arthur, thank you!

    • PhoenixV profile image

      PhoenixV 6 years ago from USA

      Great tips and advice voted up.

    • oceansnsunsets profile image
      Author

      Paula 6 years ago from The Midwest, USA

      So glad you stopped by Phoenix, thank you for your comment and voting up!

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