10 Reasons: Why a written Financial Plan can make a difference

A Financial Plan helps you analyse your Short, Mid and Long-Term financial goals and acts as a go-to action plan document to help meet those goals. The following are the 10 key benefits of documenting such a plan.

  1. Income You can manage your Income sources effectively through planning, know what are your Active and Passive income streams and visualize at what stage in the future both these streams stack up against one another.

  2. Cash Flow: Manage your Cash Flow efficiently by monitoring your spending patterns. Effective Tax Planning and budgeting could help ensure your Incomes stay above your expenses resulting in positive cash flow.

  3. Investment: A proper financial plan considers your personal circumstances, objectives and risk tolerance. It acts as a guide to help choose the right types of investments to fit your needs, personality, lifestyle, and goals.

  4. Capital: Money makes money, an increase in cash savings, can lead to an increase in your capital. Allowing you to consider more sophisticated forms of investments to improve your overall financial well-being and/or providing sustainable passive income streams.

  5. Family Security: Providing for your family’s financial security is an important part of the financial planning process. Having the proper insurance coverage and policies in place can provide peace of mind for you and your loved ones.

  6. Financial Understanding: Better financial understanding can be achieved when measurable financial goals are set, the effects of decisions understood, and the results reviewed. Giving you a whole new approach to your budget and improving control over your financial lifestyle.

  7. The standard of Living: The savings done by good planning can prove beneficial in difficult times. For example, you can make sure there is enough asset saved through passive incomes to replace any lost income should a family breadwinner become unable to work.

  8. Assets: A nice ‘cushion’ in the form of assets is desirable. But many assets come with liabilities attached. So, it is important to determine the real value of an asset. The knowledge of settling or cancelling the liabilities comes with the understanding of your finances. The overall process helps build assets that don’t become a burden in the future.

  9. Emergency Fund: A sudden change to the financial situation can still throw you off track. It is good to have some investments with high liquidity. These investments can be utilized in times of emergency. Once a constant cash flow is established and desire to invest into more sophisticated investment plan is achieved, the passive income obtained from these vehicles can provide you with that extra bit of savings and help you scale the summit of financial freedom

  10. Ongoing Advice: Establishing a relationship with a financial advisor you trust is critical to achieving your goals. Your financial advisor will meet with you to assess your current financial circumstances and develop a comprehensive plan customized for you. Like a lawyer or a doctor, your financial advisor should also be a part of your power team whom you can put your faith into.

Interested in knowing more about how we can help your employees financially fit? We would love to have a word with you.

Written & Published by:
Prashanth Prabhu, Founder & Principal Investment Adviser – 29k Group

Published by:
Sheren Susairaj, Marketing Associate - 29k Investment Advisers Pvt. Ltd.