Financial planning is the process of meeting your life goals through the proper management of your finances. An individual has various short-term as well as long-term goals such as buying a house, car, television, refrigerator, washing machine, etc., and saving for children’s education, marriage, retirement, etc. A financial plan acts as a guide as you go through life’s journey. It is very essential to have an adequate financial plan in order to fulfill your life goals without any stress. A financial plan helps you give direction and meaning to your financial decisions. It allows you to understand how each financial decision affects other areas of finance.
By viewing each financial decision as part of a financial plan, it might help you to consider the long-term and short-term effects on your life goals. This will help you feel more secure and more adaptable to life changes once you can measure that you are moving closer to the realization of your goals. A financial plan predominantly consists of four categories such as insurance planning, investment planning, retirement planning, and tax and estate planning. Your financial plan should have adequate insurance in order to insure yourself and your family against any unfortunate event occurring in the future.
An investment plan will help you to fulfill your long-term as well as short-term life goals and will help you in saving at regular intervals. A retirement plan will aid your sunset years to be stress-free. A tax plan helps an investor in earning tax-efficient income while estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death or incapacitation. Let’s look at each of them in detail.
Insurance Plan
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