We all dream of becoming Bill Gates, Steve Jobs, Ambani and Tata, basically RICH! Fulfilling this dream requires not only dedication & hard work but also Smart Work. So here are some tips on how to take your first step:
Becoming rich is not only related to your earnings but with lots of careful steps towards managing it efficiently. Financial planning is a major factor in achieving such goals in life. It focuses on five stages, which are:
1- Cash flows and debt management
2- Assessment and management of risks
3- Right investment planning
4- Tax planning
5- Retirement planning
Anyone who can Manage the Cash Flow carefully, aware of inherent risks and is capable of creating a surplus, then those surpluses can get invested in the best asset allocation mix.
Financial planning is the first step to generate wealth. A comprehensive financial plan analyzes the risk appetite, sets the financial goals and fills the gaps in between.
Financial planning gives clarity with respect to all the defined financial goals. It is not about how much money you already have. Rather, a financial plan helps you to create wealth. That is why every rich person needs a sound financial plan to grow their wealth to enjoy their money in the longer run.
What is financial planning in actual? Here are some inputs:
- Designing the right strategies and execution of them for achieving financial goals is knows as Financial Planning.
- A financial plan is the most important part of anyone’s earning lifecycle whether or not he/she has money or wealth.
- .Financial planning focuses on five major stages
i- Cash flows and debt management
ii- Assessment and management of risks
iii- Right investment planning
iv- Tax planning
v- Retirement planning
4. A financial planner can only suggest the best asset allocation based on a person’s risk profiling.
You must have a clear idea about all your financial goals so that you should not get in the financial mess due to wrong financial decisions or not following a sound financial plan. The financial plan is a necessity irrespective of income and to set measurable specific goals. Example of a specific and measurable financial goal is like, “a person has to generate a corpus of Rs 40 lakh for your child’s higher education by 2025”. A non measured goal would be like, “You want to amass sufficient money for your child’s education when he/she turns 18”.