5 Benefits of Financial Planning
- Ashwin Dhanesha , CPA, EA, CFP®, PFS, CFA, MBA |
Financial planning is a systematic approach towards pursuing your financial goals. It involves making the right financial decisions today for better financial results in the future. Financial planning adds clarity and inspires discipline to your financial life, which gives you a sense of control, assurance, and peace of mind regarding your financial future.
Following are the top five benefits of financial planning:
- Clarity: The financial planning process involves quantifying and prioritizing your financial goals, consolidating and organizing all your current finances, and assessing and analyzing your financial situation, to identify the gaps between your current financial position and your future financial goals, and how best to bridge these gaps. The clarity you gain during the financial planning process helps you see the big picture of your financial life and understand how your individual financial decisions impact your overall financial success.
- Discipline: Financial planning simplifies your financial life, which in turn inspires the financial discipline and commitment you need in order to pursue your financial goals. Knowing precisely where you stand at any given time in comparison to where you want to be in the future, and the steps you need to take to get there, helps you stay focused and committed in your journey towards your financial goals.
- Efficiency: Financial planning is about planning ahead for the financial future you desire. Knowing now where you want to be in the future allows you the time you need, to design and put in place a solid game plan that can help you arrive at your destination in the most efficient manner possible. For example, knowing what age you want to retire at and how much money you will need to have saved by then, helps you identify and employ sound savings, investment, and tax strategies along the way, that are most efficient and advantageous for your situation in achieving your retirement goal.
- Control: A financial plan provides the guidance you need to make sound financial decisions. It allows you to be in charge of your financial life, take deliberate actions in pursuing your financial goals, and proactively address potential risks that may jeopardize the financial future you desire; all that you need to feel confident in your financial journey and in control of your financial destination.
- Peace of Mind: Financial planning provides a sense of assurance towards achieving your financial goals. It provides you the guidance you need to manage your financial life and the tools you need to measure your progress towards your financial goals. Always knowing you are on track to achieving your financial goal helps you to have peace of mind regarding your financial security in the future.