Financial planning is a long-term process of wisely managing your finances so that you can achieve your goals and dreams. It is a process, which starts with the identification of your specific goals. Once this critical phase is complete, pertinent data is gathered and your goals are analyzed in terms of your ability to achieve them. Specific strategies and alternatives which help you achieve your goals are then developed and documented. A specific action plan is then implemented to assure that your overall plan comes to life. Once your plan is up and running, it should be reviewed periodically to assure that you are moving to your goals. These goals may include:
- Buying a house
- Buying a car
- Saving for your child's education
- Your daughter's marriage
- Eventually planning for retirement
Financial planning is all about preplanning.
Most young professionals today do not plan their finances - some because of a lack of awareness about its benefits, others because of their belief that they do not require it at the initial stage of their careers and some others because it may be expensive for them now.
The sooner you start investing, the more time your money will have to grow - pure and simple "compounding" or the "snowball effect" on your money.