Category: Career Advice
Created on Tuesday, 14 December 2010 06:07
Written by Sam Goh
Financial planning is the process of meeting your life goals through the proper management of your finances. In this case, what this implies is that you are the sole and primary focus of the entire financial planning process. Therefore, in a quest to achieve the best optimal results for your financial planning, you will need to be prepared to avoid some of the common pitfalls by carefully considering the following suggestions here. 1. Set Measurable Financial Objectives
Set specific goals of what you intend to achieve with close regard for the time frame to achieve these goals. For instance, instead of saying you want your children to attend "good" schools or that you wish to be "comfortable" when you retire, you need to quantify what "good" and "comfortable" mean so that you will be aware of when you have reached your goals. 2. Understand the Effects of Each Financial Decision
It is of vital importance to note that each financial decision that you make can and may have implications on several other areas of your life. For example, an investment decision may lead to a series of implications with regards to your personal tax planning.
Another example will be the decision to send your child overseas to further his/her studies. In this case, this may affect when and how you meet your own retirement objectives. As a result, a financial review may be required in this case. Remember that all of your financial decisions are interrelated.3. Re-evaluate your Financial Situation Periodically
Financial planning is a vibrant process. As mentioned in the previous example, your financial goals & priorities may deviate overtime due to changes in your lifestyle or circumstances. Some examples include marriage, giving birth, purchase of car/house and change in employment etc.
Therefore, do review your financial priorities and plan overtime so as to reflect these changes. The reason is so to facilitate and ensure that your current priorities are closely aligned with your long- term goals.4. Start Planning As Early As Possible
Do not hold back your financial planning. Research has shown that individuals, who start to develop good money habits early, tend to fare better than those who prefer to delay and wait until later in life before they start to engage in good money habit practices.
At the same time, by developing and engaging in good financial planning practices such as saving, budgeting, investing early in life, you will be in a better position to meet life changes, challenges and tackle emergencies effectively and efficiently with your finances.About the Author:
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