Why is Early Financial Planning Important?
The Need to Invest Early
Every single one of us dreams of the day where we can retire in peace and take it easy for the rest of our lives. However, most of us make the brazen mistake of erroneously thinking that financial planning is something to start later on in life when nearing retirement. However, the truth of the matter is that the earlier you begin chalking out a sound financial strategy for your future, the better off you will be in meeting your long-term financial goals
H.W.Lewis, an acclaimed physicist and a former professor who taught physics at UC-Santa Barbara had mentioned this quote in his book, Technological Risk, ‘Those who are unwilling to invest in the future haven't earned one’. This quote was solely aimed at people who procrastinate the financial planning process.
When you invest early on, time is on your side, and the money you save today has several decades to grow. However, life often throws curveballs at you that can end up disrupting even the best-laid plans. Truth be told, the more you fend off financial planning, the tougher it might be for you to define a financial course as per your requirements. Ideally, you should start saving money and start building your finance from the time you start off with your first job. Establishing disciplined spending habits today will carry over and benefit you later. By investing early and staying invested, you will have put in the foundations that you need to meet your long-term financial goals. If you still haven’t started financial planning for your future, there is no better time than now to start. Here are some of the many benefits of financial planning:
Take Advantage of Compounding Interest
Effective wealth management is all about having a strategic financial plan in place at it can ensure your financial objectives are met. To ensure you remain on track to meet your future goals, you need to somehow make sure your money keeps working for you. When you invest early in your working life, you’re giving enough time for your funds to grow. For starters, you are letting the power of compounding interest do the work for you. If you want to create a sizeable corpus, having age by your side certainly gives you the edge you need to build wealth towards your later years. When you are in your twenties, you have at least a good 30 to 40 years before inching towards retirement. With that much time to save and invest money, you have the magic of compounding interest working by your side.
You’re Financially Prepared
In the absence of a clear financial framework, you will find it difficult to plan for your future. When you have a sound financial plan in place for the future, every Rupee you saved automatically gets assigned a purpose. In case something untoward were to happen or alternatively in case there's a significant event in your life like paying for child's tuition, you will be better prepared. Additionally, you will also have the peace of mind knowing that you're confident of not only being able to provide the best environment for your family but also knowing that you will be able to tackle anything unexpected that comes your way.
Evolving Financial Goals
By having a reliable financial plan, the chances are that you will be able to set realistic goals and remain on track to meet them. When you’re able to successfully identify your financial strengths and weaknesses, you are effectively putting yourself in a position wherein you can build on your strengths while addressing any forthcoming weaknesses. Effective wealth management, based on a strategic financial plan, grants you a dependable plan to bank on which not only supports your needs but also adds the organization you need to make sure nothing slips through the net. Consequently, having a financial plan in place will give you the best chance of attaining your goals.
Anything we end up pursuing in our life mandates the need for a definite plan in order to do so. Which is why it’s imperative to not leave your financial planning to chance; without having a goal or plan ready. Sound financial planning requires discipline, self-study and time. Hence, needless to say, the sooner you get started on it, the better it is for you in the long run.
AN Apr 18/18