A bigger home, a better car, your children’s admission to the best college, or financial stability during your post-retirement years – sometimes your financial goals may seem challenging. However, achieving your goals is simple when you have the right plan to help you manage your money. There lies the significance of financial planning. Let us find out about financial planning and its importance to grow your wealth.

What is Financial Planning?

Financial planning helps you create a step-by-step roadmap to meet your financial objectives in the future, keeping in mind your current income and investments. Financial planning gives you better control over your income by:

• Properly defining your financial goals
• Managing your expenses & taxes, and
• Investing efficiently

Why is Financial Planning Important?

Child's education

Education is becoming increasingly expensive. With prices rising every year, these costs will only go up in the future. You can use a children’s education calculator to understand the amount of funds required for your child’s bright career. A good financial plan will help you build up the amount required by the time your child is ready for college. A ULIP plan like ICICI Pru Smart Kid¹ is a viable solution. It offers:

• Financial rewards² for staying invested for a longer duration
• Returns³ at the end of the policy term to fund your child’s education
• Life cover⁴ offering lump sum payout to cover your child’s expenses in case of an eventuality during the policy term
• Waiver of premiums in case of an unfortunate event before the maturity date

Post-retirement goals

Everyone wants to be financially independent after retirement. Thus, you must ensure you have enough funds to cover future expenses and fulfil your post-retirement dreams. A retirement plan offering regular income ensures financial security even after your paycheque stops. With a retirement planning calculator, you can review how much to invest to build enough funds for a comfortable retirement. When you start investing early, you get a head start for achieving this goal.

Money management

Managing your money is essential to achieve important financial milestones. A financial plan helps you prioritise your important life goals and estimate the funds needed to achieve them. It also helps with getting significant returns on your money within the time-frame available for fulfilling your goals.

Tax-saving

Taxes form a significant part of your expenses every year. Hence, it is necessary to make the right investments that help with saving taxes⁵. With financial planning, you can identify such tax-saving investment options that match your savings goals as well.

Emergencies

With careful money management, you can keep aside a nest egg worth six months’ salary. It can be useful in case of unforeseen expenses. Financial planning keeps you ready for uncertainties so that financial emergencies do not derail your savings or affect your living standards.

Thus, the significance of financial planning is the clarity it gives on managing your money effectively and improving your financial well-being.

People like you also read ...