6 Reasons You Should Consider Planning Your Finances

“Planning is bringing the future into the present so that you can do something about it now.” — Alan Lakein

Asa kid, I’d remember my mother always telling me to save my money and put it in the piggy bank as I would be able to use that money for something bigger and better at a later date. I remember getting one of those piggy banks as a present around the age of ten and thought it was probably the dullest thing I had received all year. 😜

However, when I look back on that event, it’s the first time the habit of saving money was inculcated in me, making it one of the most important lessons I have learnt. In a minimalistic way of sorts, that’s the first step I had taken towards Financial Planning. The notion of saving your money to use it at a later date for a more significant purchase almost always sounds as good advice, even to a ten-year-old. (I think I was saving up for more Pokemon Cards at the time)

Financial Planning today isn’t as basic as saving money in your Piggy Bank (Bank Account), even though we wish it were. The process has quite a few variables that depict a roadmap towards a sound financial future for your Needs, Wants and Aspirations. Thus, also giving you a big reality check on whether or not you are on track to meet those goals.

We usually focus on planning for something on primarily two significant occasions:

1. Just before we make a major purchase like buying a house, or purchasing a new car.

2. During the times of Uncertainty. The most relatable example to give here is the Pandemic, which results in loss of jobs, lower pay, decreasing standard of living, anxiety, etc.

The problem with the above approach is that we are always caught off guard with the decision making process as it involves a degree of risk which we haven’t been able to ascertain. This results in forcing us to make a choice of letting go of one need to have the other (technically known as the Opportunity Cost).

For example: If you have recently lost your job due to the Pandemic and face the probability of not finding another one in the next few months, you will get into the process of making lifestyle