“Do not save what is left after spending; instead spend what is left after saving”, these are the words of Warren Buffett a famous American investor. He is widely regarded as one of the most successful investors in the world.
In a fast-paced world where we are constantly consuming things, we often forget the importance of saving. Many of us just live for the day, not considering the need to keep something in store for the future.
The general idea of financial planning includes retirement planning, insurance planning, estate valuation and investment management.
In simple words, a financial plan is a blueprint to guide you towards achieving your life’s financial goals. We need to evaluate personal priorities and make effective money management decisions to safeguard our future. After evaluating your financial goals, you need to calculate the assets to meet those goals and give yourself a deadline to achieve these goals. It would be helpful to write an action plan that answers questions like, what assets you wish to acquire or what type of savings you want to make. Commit to memory that financial planning is a process and not a product.
Personal finance defines an individual’s financial decisions in analysing their current financial position, forecasting short and long-term needs and performing a plan to fulfil those needs within individual constraints. Matters of personal finance include budgeting, insurance, mortgage planning, savings and retirement planning. It can make your financial future more manageable and can drift by determining what is most practical and beneficial for you.
A prudent financial plan will serve an individual to reach financial security and financial independence.
The sooner you start financial planning, the better chance you have of achieving your goals. A phrase we must constantly remind ourselves is: “If you fail to plan, you plan to fail”.
- The reader is a communications executive based in Dubai, specialising in financial planning.
