What is financial planning, and why is it important to you.
Even if you don't think you are a financial planner, you should start thinking fast. In the United States, there are approximately 5.6 million people who are self-reliant or financially independent millionaires. And what's so unbelievable about those statistics, you ask? This is because it is only about 5% of the American population.
The remaining 95% of the American population (we're talking about 106.4 million people here!) are not only not rich, but most of them are facing financial disaster, either due to poor financial planning or stupid spending!. This is why you should start thinking like a financial planner. Financial planning is not that complicated, and it can make a big difference in your life.
As the saying goes, "failing to plan is planning to fail". The same can be said if you don't plan your finances well, it doesn't matter if you have a high income, you still need financial planning skills, to keep you out of harm's way and to ensure that your life will be financially secure. .
The fact is that financial planning is not an option, most of us need to think ahead today, and you should immediately practice your financial planning skills to enjoy the money you make today in the future.
The basics of financial planning is managing all your finances, this is very basic advice, okay. However, more often than not, we prefer to concentrate on other things in life like health, studies, work and more.
Think about the things you want to achieve in life, and how you are going to achieve them, financial planners always set their goals and organize their thoughts before starting to really get the wheels moving. Financial planning can include buying a house, paying for your children's education, and thinking about retirement funds.
Financial planning will help you use your current paycheck and your savings to start working on a program that will give you peace of mind on a financial level, a financial planner will plan a budget according to each household's budgeted expenses and savings plan drawn up, this will help you spend money wisely and effectively.
A financial planner would consider having your savings invested in an investment vehicle that pays higher returns than a regular bank account, it will add some strength to your savings and help you achieve your financial goals in a shorter period of time.
By starting your retirement planning now (not later!), you can gauge how much money you need to maintain your current lifestyle and where this money will come from. Many people, especially those who are just starting out, always put their retirement planning aside with excuses like “I just started working” and “Oh, I'm still young”.
However, many fail to realize that by starting to save early for retirement, you will be able to save and invest more because of the "compound interest" magic, provided you invest your savings wisely. Maybe you don't have to wait until you're 65 to retire. As you know, by the age of 40, you may have reached your financial independence and don't have to worry about getting up early to go to work or working late because there are deadlines to meet.