Financial Planning for Today's Needs
Over the last
few years, terms like financial planning and personal finance have
emerged as buzzwords of sorts. Newspapers, magazines, television
channels and just about every one under the sun seem to be talking about
the importance of financial planning. So what is financial planning;
more importantly, does it merit the attention that it is being given?
Financial planning is a process through which an
individual can chart a roadmap to meet expected and unforeseen needs in
life. Simply put, the intention is to take necessary steps to ensure
that the individual is equipped to accomplish what he has set out to
achieve and is prepared to deal with contingencies as well.
And yes, the importance of financial planning
(especially in the present scenario) cannot be overstated. Among others,
two factors are responsible for the same i.e. inflation and changing
lifestyles.
Inflation
Inflation is a situation where too much money chases a
limited number of goods. This leads to a fall in the value of money. It
is also expressed as a rise in the general price level. For example, a
product that costs RM100 at present would cost RM105 a year from
today, assuming that prices rise at 5 per cent. This is the impact of
rising prices over one year; over a 30-Year period, assuming that inflation continues to rise at 5 per cent, the same product will be
priced at RM432! Financial planning can ensure that one is equipped to
deal with the impact of inflation, especially in phases like retirement
when expenses continue but income streams dry up.
Changing Lifestyles
The second factor is changing lifestyles. With higher
disposable incomes, it is common for individuals to upgrade their
standard of living. For example, objects like cars that were considered
luxuries not too long ago, have become necessities today. Financial
planning has a role to play in helping individuals both upgrade and
maintain their lifestyle as well.
Finally, there are contingencies like medical
emergencies or unplanned expenditures that an individual might have to
cope with. Sound financial planning can enable him to easily mitigate
such situations, without straining his finances.
Principles of Financial Planning
At its core, financial planning is not a very difficult task. All it
takes is discipline and religious adherence to the principles of
financial planning.
Discipline has a part to play at every stage, from
setting objectives to actually executing the plans that are meant to
achieve those objectives. In fact, an adhoc approach while dealing with
finances is one of the major reasons for the financial distress that
individuals find themselves in.
Setting objectives, investing in line with one's risk
appetite and asset allocation are some of the fundamental principles of
financial planning.
In conclusion, it can be stated that achieving
financial nirvana isn't as difficult as it is often made out to be. To
get there, all one needs to do is, stick to the basics of financial
planning.
Malaysian Financial Tools for Malaysian Financial
Needs
Raudhah Agency has gained wide experiences in
consultation and suggesting the best financial tools to meet financial
needs of our fellow Malaysians.
As time passes by and we do agree that the earlier we
start the easier we get to our destination. So, let's wait no more,
schedule for a consultation and
GET THIS EXCITING PLANNING STARTED!