When to start financial planning? Answer is always, “NOW”
We have come across many who are skeptical about when is the optimum time to formally start financial planning. The need to properly manage your personal finances is invariably imperative. But, unfortunately, skills to manage personal finances are not taught in schools. Thus, many end up taking unsuitable financial decisions in their lives. Each time you take an unsuitable decision regarding your finances, you are minimizing your chances of fulfilling your financial commitments. A properly articulated financial road map empowers you to avoid committing average mistakes regarding family finances. This article is to address people who are thinking about when is the ideal time/situation to start financial planning journey.
As practicing Certified Financial Planner in Kolkata, we have seen people start buying insurance products and investing in traditional investment vehicles without preparing a personal Financial Plan in the first place. Thus, due to lack of clarity and unbiased guidance they remain jumbled with the following questions:
- I have insurance covers. But am I adequately insured?
- I have an emergency fund. But, is my Contingency Fund sufficient?
- Are my potential family members aware of our assets and liabilities? Are they capable enough to manage in my absence?
- I pay EMIs on time but, how does debt planning?
- Where to invest my savings?
- How to invest my savings?
- How much risk should I take while investing?
- When and how much money do I need?
- When and how to utilize existing investments?
Are you loitering around similar concerns? Once you start financial planning in a holistic manner, all your concerns are usually addressed in a systematic manner. Not only that, financial planning processes and tools empower you to develop informed decision-making ability by improving your personal financial awareness. As you know your way forward, you become confident regarding your financial position. Ultimately, with clarity comes peace of mind.
Start financial planning for overall financial well-being
Can you relate to one or more of the following aspects of life?
- Starting your first job
- Struggling with cash flow planning
- Planning to get engaged or married
- Planning for a baby
- Deciding to start saving for your child’s higher education
- Wondering how you would like to retire from work-life
- Approaching retirement
- Switching jobs/careers
- Relocating somewhere on account of job
- Buying a house or car
- Quitting job for further studies
- Getting divorced
- Loss of spouse/ potential family member
- Starting a business
- Expecting an inheritance
- Making plans for your estate
- Planning a sabbatical
If any of the above scenarios apply to you, you may engage a qualified Financial Planner and start financial planning in an integrated fashion.
Thinking when to start financial planning? The appropriate time is now…
Having a Financial Plan helps you to avoid getting misguided by unethical salespersons
As Arijit Sen is a SEBI Registered Investment Advisor in Kolkata, we have been hearing that many of you fall for the misleading sales pitch and end up buying financial products. You don’t analyze whether these financial products are a solution to all your financial concerns or not.
Recently, one person who was searching for a Financial Advisor in Kolkata approached us for financial planning services. During the introductory meeting, his first statement was, “I am not a spendthrift by nature. Still, I am not able to manage family finances properly. I want to start financial planning and get back on track.”
We listened to him patiently and decided to onboard him as our client. We asked him to ensure that his spouse attends the future sessions going forward along with him. Data gathering sessions revealed various matters. Although the entire family is not a spendthrift, certain financial moves were such that the family’s financial position continued to be unsteady.
Unfortunately, people seek professional guidance only when they have already committed financial mistakes. A few of them can be:
- Investing in unsuitable investment products.
- Buying unsuitable insurance products and paying costly premiums.
- Overburdened with EMIs or they are in a debt trap.
- Uncontrolled spending, leading to deficit budget.
Time can turn little financial mistakes or errors at the start into massive problems down the road. But, time isn’t necessarily your enemy. It’s also the secret sauce to rectify the missteps via corrective actions laid down in the Financial Plan.
We sincerely believe that it’s never too early or too late to start financial planning. The earlier you start, the better. Procrastinating the planning process for your family finances can prove to be damaging and beyond control at times.
We always advise prospects to create and follow a Financial Plan. This safeguards you from taking wrong personal financial decisions to a great extent.
As Financial Consultant in Kolkata, the point we are trying to make even though you are not overspending, does not mean that you do not need to do financial planning. Apart from this, there are various other myths around the necessity to start financial planning. Few are:
- Financial planning is a one-time activity.
- Financial planning is only about where and how to invest. I can simply Google that.
- A Financial Planner will just tell me to stop spending money.
- I am too young to start financial planning now.
- Only rich people need to do financial planning.
- I am saving enough and investing for the future.
- I cannot afford to pay a fee to a qualified Financial Planner.
Being a Fee Only Financial Planner in Kolkata, we strongly advocate that developing a Financial Plan is just the starting point towards your financial freedom. Implementation of action plans and a periodical review of your progress sets the right tone in strengthening your personal financial position. The comprehensive financial planning processes and tools will cover your entire financial picture and will identify areas where you could be more efficient with your money.
