Are you procrastinating your decision to start planning your finances (Financial Planning) to ready money for your financial goals?
Are you doing it because you do not have the knowledge and you will not get the right advice to help you? Are you doing it because your work is very demanding and you are not able to take out time to do so? Are you doing it because you believe that you are earning well and you do not need this?
These are some of the commonly cited reasons for not being able to take up one of the most important activities of your life to set your finances right.
Why is it important?
The most important question to ask ourselves is “do I have a clear understanding of my financial goals?” Many times we have a soft feeling that we know all our financial goals but in reality, we don’t. Everybody knows the often talked about goals i.e. planning for kid’s education, marriage and retirement. What if you were asked, “What would you like to do after retirement which will make you happy?”. You think it through and come back with options “I want to do farming, I want to set up a small school for children’s in my village, I want to donate money to charity for poor people, I want to go and stay in French Rivera for a year, I want to hike all key mountains in the world”. Well, all of a sudden you have come out with a set of Life Centred goals that matters to you and you need to arrange money for the same.
My friends and colleagues keep telling me that they are busy and stressed at work and not able to give time to themselves and their families. Health and happiness have taken a backseat. I ask them “Do you know whether you have enough money to achieve your goals?”. The typical answer is “NO”. What if you knew that amount and have that money or you know how to accumulate that? That will change your mental status, increase your confidence, increase your productivity at work, improve your health and bring happiness to you and your family. While money may not be the only factor to make you happy, the knowledge and clarity about how you are going to achieve your financial goals will take your worries away.
Never be under the impression that if you are earning well you do not need a financial plan. Remember, higher-earning has a tendency to increase your expenses and it is a one-way street. Your family will find it very difficult to lower the expenses anytime in the future. That means you and your family have relatively less flexibility to respond to adverse situations. I have clients who are earning ₹ 1 crore per annum but finding it hard to achieve their financial goals and then I have clients who are earning only ₹ 10 lakhs but are sitting pretty well to achieve their financial goals just because they have started it early and know how to achieve their goals.
In short, a roadmap of the journey to financial independence is not negotiable and is needed for all.
How can you make it happen?
Well, if you have the interest and the time and you believe you can do it on your own (DIY), gather the necessary knowledge and put together a financial plan. While the plan may not be perfect, it will allow you to start thinking in that direction and align some of your efforts towards the plan.
If you need a head start or are late in the game, it will be ideal for you to take the help of a Fee-Only SEBI Registered Adviser. Note that the SEBI Registered Advisers have to comply with SEBI Regulations and have a fiduciary responsibility to advise in the best interest of the client. They are also accountable to SEBI. Among SEBI Registered Advisers, you should prefer Fee-Only Advisers because their advice is conflict-free as they do not get any commission from the products recommended by them.
You should pick an Adviser who is trustworthy and flexible. His working style should match yours and you should feel comfortable talking about anything with him.
If you identify a good adviser, do not get too hung up on fees. Remember, this advice is going to shape your financial independence and your life hence you better bet on the best in the industry.
Why does it need to be done now?
Any delay in coming out with the financial plan makes it harder for you to implement. The more time you have on your side, the more flexibility you will have to take an aggressive (calculated risks) approach to achieving your goals faster.
As the number of remaining years in your career decreases, your risk-taking ability diminishes and you have no choice but to use a conservative investment approach.
“The Best Time for Financial Planning Was Yesterday; The Next Best Time Is Today”
You may also like to read Why is it risky to have adhoc approach for financial planning?
The writer is a SEBI Registered Adviser and Founder of FinMyn (https://finmyn.com). He provides Fee-Only Financial Planning and Investment Advisory services. If you want to know more about him, click on https://finmyn.com/about/.