Lack of awareness about how to manage money leads people to ask, âWhy is personal finance important?â The reasons are too numerous to fully detail here. Menu. Low Risk High Return Investment – is it possible? The financial plan will have a broad outline of what is to be done so that those taking care of your finances know what steps are required to be taken to manage your estate. I used to think it was net worth, or possibly liquid net worth, but I have since come to the conclusion that these measures have some serious limitations.Net worth, for example, isn’t the best indicator of financial acumen because it doesn’t come with any context. Seeing the figures in front of you can be a jump-start toward getting your finances in order. A proper financial plan will have the retirement goals listed and the income, expenses and investment details. Although not exciting to most, personal finance directly relates to your life everyday. Yes, when we make a financial plan first we must aim for maintaining the present lifestyle first. https://www.canada.ca. I like this article . Personal financial management is a very important concept that is perhaps one of the most neglected concepts in our society. http://www.finra.org/sites/default/files/investoreducationfoundation.pdf, The Federal Deposit Corporation (FDIC) analyzed the intermediate-term impact of a financial literacy program on consumersâ behavior and confidence 6 – 12 months after the end of the program. 5. Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. I want to get my children educated abroad. I’ve been working for 10 years and I already feel that I am not getting any younger. With a financial plan, you can assess your tax outgo at the beginning of the financial year. This is bad enough, but the issue goes far deeper. These statements are just wishful thinking if you do not plan your finances to achieve them. https://www.nfcc.org/wp-content/uploads/2017/03/NFCC_BECU_2017-FLS_datasheet-with-key-findings.pdf, The average debt of students when they graduated from college rose from $18,550 (in 2004) to $28,950 (in 2014), an increase of 56 percent (Institute for College Access and Success). 2. Every aspect of your life depends on it. The Importance of Financial Planning can be understood from the statement of one of our clients “I am just concentrating on the financial plan you have advised me. You made a good point about how financial planning is important in order to have a carefree retirement, backed up by emergency funds in case needed. Young, motivated and tech-savvy adults have all the information you need to manage your personal finances right at your fingertips. 7. When you sit down and take account of all your sources of income and compare those figures to your monthly debt obligations, you could be surprised at just how much money you waste on unnecessary expenses. It is very simplementation and easy to understand. You can plan your finances such that you pay the least amount of tax in a legal manner. Another 69% reported their level of savings had increased after taking the program, with only 3% reporting that it had declined (Federal Deposit Insurance Corporation). I should definitely start looking into getting professional financial counsel to see what my options are. A lack of jobs contributes to riots and illegal activity. The stress can trigger physical symptoms, which include high blood pressure and painful headaches. Importance of personal Financial planning anticipates financial requirements in different conditions and ensures smooth financial flow at all times. Once you understand the importance of personal Financial Planning – you can start taking the steps…, One of the most shared articles on TFL – Financial Planning Thumb Rules. 8. Personal finance is a difficult topic to learn about and for that reason a person just naturally tends to shy away from it, making excuses in an attempt to avoid having to learn about it. The credit scores are recorded on a 280-850 scale. 6. It is the belief of the NFEC that personal finance should be required in high schools and elementary to help mold positive financial behaviors and help students work toward self-sufficiency. Read this powerful guide on the importance of personal finance. It is possible to achieve a better understanding of your finances, when you put in place measurable goals, understand the effects of your decisions, as well as review the results of such. 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