11 Reasons Why You Need Financial Planning

You may be wondering why you need financial planning in your life, well I will be sharing about that in this post.

On one note, it is actually easy to wake up in a day and live your life without planning but you will not achieve any tangible result most times when you do that.

On another note, it is tasking to wake up in the morning to plan your day but when you do that, you will definitely get a good result.

Let look at some top reasons why we need personal planning.

Income management

Financial planning helps you plan your income. You are able to budget your income and use it to meet different needs.

For instance you could use 20% for savings, you could use 5% for insurance, you could use 10% for a project you working on and you can spend the rest on other expenses.

I’m not saying you should use your funds like this, it is just an example.

Increase in cash flow

When you are able to plan and monitor your spending, you will have the ability to save cost in some transactions which will lead to increase in cash flow for you.

It will surprise you how much cost you can cut if you have a detailed plan for your finance. The reason why most people never have enough to spend is because they do not plan their finance.

To raise capital

When you need to raise capital to run a business, the best place to raise the capital is from your savings because if you do so you won’t be paying any interest to yourself.

Raising capital from your savings will also relieve you of the pressure you will face when you have debts to settle because you have borrowed from funds from other sources.

Raising funds from your savings can be done easily if you plan your finance.

Provides financial security

There are times whereby you might need huge cash urgently and if you are the type that does not plan your finance then you might not be able to come up with the funds as at when needed.

Let’s say you are the type that plans your finance then you will be able to meet up with urgent obligations.

Facilitates investment

Personal planning makes it easy for you to invest your funds because you can only think of investing your funds when you savings.

Maintain good standard of living

You can easily maintain good standard of living throughout the year if you have a financial plan even when you are faced with unforeseen circumstances.

When funds are used as appropriated for the right use you can easily maintain a standard of life style that you want.

Financial understanding

When you plan your finance you will have better financial understanding in the sense that you will know how to set long term and short term goal.

You will also learn how to set goals and focus on achieving those goals.

Asset acquisition & management

Assets are things that can generate income such as properties. You need to be able to acquire assets and also manage those assets.

You should focus more on acquiring assets rather than liabilities because when you have assets it will help increase your income.

Avoid financial mistakes

Making financial mistake is something that is common among most people; you can easily make the mistake of investing your funds in the wrong business because you do not have the required financial knowledge that you need.

Making a mistake in your finance is a normal occurrence but when you continually make mistakes because of lack of financial discipline then that is a serious issue.

Develop saving culture

Financial planning gives you the ability save funds for when you may need them in future. Most people are not disciplined enough to save part of their income.

You can save for different reasons and for different projects also. It is actually a good habit to cultivate.

Plan for the future

Every individual needs to plan for their future in the sense that that should have a long term goal. You cannot just live your life without planning for your future and you expect that to attain financial freedom when you are old.

The truth is that if you do not plan to attain financial freedom in future, you might likely not attain it but if you plan to achieve it, you will surely attain it.

Conclusion

It is important that your plan your finance because that is one of the ways you can easily achieve financial freedom. Achieving financial freedom is something everybody should desire.