Importance of Financial Planning for Fresh Graduates Starting On Their First Jobs
What Is Financial Planning?
Financial planning is an evolving plan that changes as you grow in your career path and move on in your life stages, it is a plan that needs to be reviewed as the circumstances changes for example getting married, buying a house and raising a family. As your life goals and financial status changes you will need to review your financial plans to see if you will achieve your financial goals within the given time line.
Importance Of Financial Planning In One Breath
The short answer to importance of financial planning is this – if you do not have a financial plan, how can you achieve your financial goals? If you do not have a plan, how do you know what you need to do by when?
Other Benefits Of Financial Planning
There are other reasons why financial planning is important. For example, you will be able to manage your financial affairs better. By sticking to your plans you can avoid excessive spending and unmanageable debts. You will have a sense of freedom from financial worries that comes with lack of planning. Importantly, you will be more effective in building, using and protecting your wealth through the years.
The Steps To Financial Planning Simplified
To begin your financial plans, access the financial situation you are at now. Then ask yourself where you want to be, that is setting your financial goals. Once you have your goals, develop a plan that can get you there. Obviously, developing the plan is only half the story.
You need to action upon the plan. Once you start implementing your plan, you need to constantly evaluate and review your plan to ensure that you are on track.
Financial Planning Isn’t Just For The Rich
A lot of people feel that financial planning is only for the rich and it isn’t at the top of mind of many first jobbers. After all, if one does not have a lot of money what is there to plan? But eventually you may want to buy that first house, get married, travel the world or retire early. Where will that money come from if you did not plan?
Financial planning does not have to be complicated but neither is it a monthly budget plan. Although a monthly budget is a component of the bigger picture. Start by thinking how you can save, I am sure you have heard the line, ‘it’s not how much you earn but how much you safe that matters.’ Then how you can protect that wealth, think of yourself as a wealth making machine hence, insurance – medical, life and general insurance is important – to protect your capability to continue to build wealth. Start thinking and understanding about building wealth via investments be it real estate, mutual funds or shares.
This article has merely touched very gently on the surface of the importance of financial planning for fresh graduates with a new job. The earlier you understand the basics of financial planning, the better it will serve your interests (no pun intended).
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