By Gunaseelan Kannan
“The number one problem in today’s generation and economy is the lack of financial literacy” – Alan Greenspan, former US Federal Reserve chairman.
FINANCIAL planning can be optimised to develop the right personal finance skills, knowledge and behaviour.
Thus, the simplest definition of financial planning will be “the process of determining whether and how an individual can meet life’s goals through the proper management of financial resources”.
Financial planning can be a tool to solve our personal finance problems. It has a systematic process where we can follow, a step-by-step process to achieve our financial goals.
What are the benefits of having a financial plan? Here they are:
To identify one’s financial goals
A financial plan can help us set the right financial priority in our lives since the first element in it is setting goals.
This will help us to realise our objectives and keep us on the correct track even when there is distraction.
Many people think that financial goals are all about monetary value but in reality it is more than that. What really makes you happy?
What motivates you? What is important to you in life? These questions will be answered by a proper financial goal setting as financial goals are more than just money and success.
A well-planned finance gives us an opportunity to identify the unnecessary or wastages in our expenses.
It helps us track our expenses, understand our strength and weaknesses when it comes to money management.
By getting to know the leakages, we can take corrective steps to improve our cash flow. Am I spending my money in a worthy manner? How do I want to spend my money?
A good money management is very much related to our characteristics.
Peace of mind
Good financial planning will give us holistic solutions of our personal finance, which avoids us getting into financial woes.
When we have a peaceful and clear mind, we can concentrate on our daily routine and proceed with the right decision making without hesitations.
If we are not at peace with how we are managing our money, we will always be worried thinking of how to handle our financial emergencies, hence there is a high chance we will end up in financial difficulties.
Building better future
Our future lies in our hands. For the better or worse, we are the determiners in shaping our future. Therefore, design your future by developing a good financial plan.
A proper financial plan shows us a brighter future, helps us to keep an eye on our financial goals while enabling us to strategise our savings plans towards and beyond retirement.
When we have sufficient control on our own money, we are able to focus on shaping our future by ensuring our financial journey is all well planned and taken care of.
The above are some of the important benefits that all of us want in life which can be achieved through proper financial planning. Developing a good financial plan is a tedious and technical process but brings life-long security and content. – July 17, 2021
Gunaseelan Kannan, CFP, is a licensed financial planner with Blueprint Planning Sdn Bhd and a certified member of Financial Planning Association Of Malaysia (FPAM).
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.