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When we are young, all our needs are taken care of by our parents or guardians. But as we grow older, we are expected to provide for ourselves. It is only reasonable to have this expectation as we can’t live on our parents’ money forever. In order to prepare ourselves for an independent future, it is very important to have an effective wealth plan in place. Without a plan, it is very easy to fall in the trap of living from hand to mouth where you just go to work, get the salary, spend it, and repeat this cycle over and over again. Being in this trap may feel good in the short run but it keeps one from looking at the bigger picture. Therefore, we should always have the bigger picture in our mind. It will help us create long-term financial plans.
Wealth planning is essential in order to achieve true financial freedom. It has a number of benefits which collectively lead to our financial independence. Let’s take a look at ways in which the process of wealth planning liberates us.
<Take up Financial Quotient Quiz to understand your financial literacy & financial health - Link in the end of the blog>
· Helps us set goals: When we are going through the process of wealth planning, we set goals in order to get most out of it. Having goals gives us a direction so that we don’t lose the track as we deal with the daily affairs of life. An effective wealth planning requires to set goals which are specific, measurable, actionable, realistic, and timely. When we set our goals, which are consistent with all aforementioned characteristics, it becomes a lot easier to achieve goals. Therefore, process of financial planning helps us set smart goals.
· Acts as a source of motivation and commitment: When we have our wealth plan in front of us, we are no longer unsure about what to do next. We are not double minded about our course of action as it is clearly set out in our plan. When we know exactly what step to take next and how to take it, we feel a lot more motivated to take that step because there is no ambiguity anymore. We lose our motivation only when we are not sure about our next move. But having a clear plan continuously adds to our motivation and commitment.
· Helps in decision-making: Financial planning makes it very easy for us to make critical decisions whenever the need arises. Without a wealth plan, one can easily fall into the trap of making decision which are beneficial only in the short run. But even making such decision becomes really difficult without a plan as we are struck with so many ambiguities. Therefore, the process of wealth planning makes the decision making process a lot easier, simpler, and much more effective. It helps us make decision which are good for us in the long run and it helps us reach such decision in a very efficient and timely manner.
· Provides peace of mind: Wealth planning not only frees us financially; it also liberates us mentally. Without a wealth plan, we just react to things as they happen and are unable to take a proactive approach. When we are constantly in a state where we have to figure out things only when they have happened or are just about to happen, it can become very exhausting for us as we don’t get a chance to just breathe and relax. This can take a serious toll on our mental health. But when we have a concrete financial plan in place, we don’t have to do things in a rush and feel the mental pressure that comes along with ambiguity and uncertainty. We can tackle things proactively. Therefore, wealth planning gives us relief from emotional and mental stress.
Before you go ahead and make your financial plans, just take out a couple of minutes to take our quiz and find out your Financial Quotient (FQ). It is financial counterpart of Intelligence Quotient (IQ). It will give you an idea of where you stand as far as having financial knowledge is concerned. It will also make creating your financial plans a lot easier as you will know where you need help and where you are good on your own.
So, take our quiz and find out your FQ!
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