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6 Reasons Why Financial Planning is Important


Financial planning will help you determine both short and long-term financial goals and create a balanced plan to achieve these aims. Creating a financial plan will help you see the big picture and map out the decisions you need to stay on track.

Here are six reasons why financial planning is important.

Secure Income Management


Through effective financial planning, you will be able to manage revenues and understand just how much you need for tax payments, savings, and other expenditures.

Increase Cash Flow


By monitoring your spending patterns and expenses carefully, you will have a better idea of how to plan, prepare, and budget your earning. This will ultimately keep you ahead and help you save more money.

Add Family Security


One of the most important parts of financial planning is to provide for your family’s financial security. This means you must have proper insurance to give you a piece of mind and that your family will be secured in the case of any unexpected events.



An appropriate financial plan will consider the personal circumstances, risks, and objectives of your finances. The investment will help work as a guide to choosing the best types of investments that will fit your needs and goals.

Increase in Capital

Increase Capital with a loan

Having an increase in cash flow will also lead to an increase in capital. This will allow you to consider major investments that will improve your overall financial status and well-being.



Assets are highly desirable as well as come with liabilities. This means it is important to determine the proper value of an asset. With that, requires the knowledge of settling our canceling the liabilities to understand your finances. The process will help to build assets that won’t burden you and your family in the long-run.

Savings are meant to be used on a rainy day – or any unexpected expense. This includes the sudden change in finances that will throw you off track when least expected. It is a great idea to make investments with high liquidity as they can be used in times of emergency or when the family needs it the most.



How to Take Control of Your Finances


When it comes to managing your personal finances, it is important to understand the basics and learn how you can manage your money wisely. Not knowing how to handle your finances wisely will lead to several repercussions such as stress, from not being able to pay bills or not having enough to cover unexpected expenses.

Making the best financials choices to save and take control will allow you to make decisions based on what you want and the limits of your financial situation.

Here’s how you can take control of your finances.

1. Decide Where the Money Goes


To start taking control of where you stand, you will need to keep track of your income and expenses. You must be aware of where their money goes every month. Otherwise, you may end up spending all of it.

2. List Down Financial Goals


Decide how you want to achieve your financial goals in both short and long term. Perhaps you want to save money for a trip, or even a down payment on a house or car. Maybe your long-term goal is to retire young and be able to travel the world. Whatever the goals may be, the key is to write them down.

3. Create A Guide For Your Goals


Once you know where your money is going and what are your goals, you can take steps to align the spending based on your priorities. Financial experts advise the 50/20/30 rule. This means that 50% of your income will go to essentials such as rent, transportation, utilities, food and medical. The 20% will go to debt reduction, savings, and charitable contributions. The 30% can be used for flexible expenses such as cable, phones, etc.

4. Ask a Financial Advisor

While it is your finances to manage, you can consult a professional financial advisor to help give you tips. You can ask how to pay off debt, stick to your budget, and even save up money for major expenses like cars, house etc.
Follow this guide and help you find your way to financial freedom. Create a plan and make it happen!