why it is imortant to have a personal financial plan?
just wondering…it’s for my friend’s paper
Because of the silly cliche, no one plans to fail, they just fail to plan. Silly, but true.
Without a personal financial plan, you will not be making deliberate choices on how to spend your money – you’ll be more likely to make impulsive choices. When you make impulsive choices, you are less likely to end up having the things you really want in life. Some of the things that require financial planning include being able to purchase a home or a car or retire someday. Even if you never plan to retire, wouldn’t it be nice to someday be financially independent? That way, you have the choice of where, when, and how you work for money.
Without a personal financial plan, you won’t know if you can afford to buy a new car, for example. You might be able to get financing alright, but then later find out you can’t afford the new car and still pay rent, buy insurance, buy clothes or do other things you like to do.
Without a personal financial plan, you probably won’t have any emergency savings set aside. Then, you’re likely to end up using credit cards or payday loans to pay for unexpected expenses, and in the long run, using these types of loans can cost you many times more the amount you needed to spend in the first place.
Without a financial plan, you may end up impulsively spending money on things that don’t mean very much to you once the immediate thrill of having those things is gone. Then, you may find yourself wishing you had that money to spend over, on something more important.
Because of the silly cliche, no one plans to fail, they just fail to plan. Silly, but true.
Without a personal financial plan, you will not be making deliberate choices on how to spend your money – you’ll be more likely to make impulsive choices. When you make impulsive choices, you are less likely to end up having the things you really want in life. Some of the things that require financial planning include being able to purchase a home or a car or retire someday. Even if you never plan to retire, wouldn’t it be nice to someday be financially independent? That way, you have the choice of where, when, and how you work for money.
Without a personal financial plan, you won’t know if you can afford to buy a new car, for example. You might be able to get financing alright, but then later find out you can’t afford the new car and still pay rent, buy insurance, buy clothes or do other things you like to do.
Without a personal financial plan, you probably won’t have any emergency savings set aside. Then, you’re likely to end up using credit cards or payday loans to pay for unexpected expenses, and in the long run, using these types of loans can cost you many times more the amount you needed to spend in the first place.
Without a financial plan, you may end up impulsively spending money on things that don’t mean very much to you once the immediate thrill of having those things is gone. Then, you may find yourself wishing you had that money to spend over, on something more important.
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If you do not watch your finances or money the possibility of being cash busted is real.
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Plans are important. It is important to know where your money is going, how it is invested, and what it should be worth in a set time. Otherwise, you’re just going through life blindly.
A plan usually reflects the investor’s attitude to risk through the investments they have chosen. It should have a timeline, a goal amount, and involve multiple investments, spread over different asset classes. This ensures that when times are bad for some asset classes, you don’t lose your entire portfolio.
If you don’t plan what you’re doing with your money, then chances are, nothing will happen with your money. Except perhaps that the value of it will go down. When investing, you’re fighting against inflation (which devalues your investment) the risk that your investments won’t perform as you expected, which sabotages your investment, and also trying to generate long term growth. There are so many factors that can affect your investments that you need a plan to be able to cope with them. Everyone’s life is different, so they need a plan that takes into account when they want to retire, how much they want to retire on, and where they want to live. These factors can influence how and why a person invests.
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