Why financial planning is important

“Going through the process of constructing a financial plan is a valuable exercise for any business owner. Financial planning is not a one-time event, but rather an ongoing process. The plan is a base from which to make financial decisions, but the plan can and should change over time based upon changes in your personal circumstances. The financial planning process can help you take a thorough look at all aspects of your financial life and organize them in the most efficient fashion for your situation.”

(The views expressed in this column are the author’s own and do not represent those of either Quantum AMC or Reuters)

The unexpected sight of a familiar pair of shoes placed on the shoe rack at home evoked memories of my dad, who died a few months ago.

I remembered how, in the weeks after his death, I had to sort out his finances and realised all was not well. It was his frugal habits that allowed him to amass wealth and not optimal asset allocation.

Do you ever wonder what your family would do if you died today? I did and realised I had to be better prepared. I am not as frugal as my dad but do have some of his habits and manage to save. But was it enough?

Was the asset allocation optimum? It was not.

Did I put a financial number to all the financial goals or commitments I had? No, I had not.

Did I have adequate life insurance? No, I did not.

How about medical insurance and home insurance? What about money for my child’s education, with her aspirations increasing by the day.

Can you imagine what your family has to go through in order to pay the bills, if you do not leave enough for them? Planning for the future is necessary.

Read more: http://blogs.reuters.com/india-expertzone/2012/10/30/why-financial-planning-is-important/

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