Financial planning is especially needed right now because of the growth of consumerist lifestyle, rising inflation that makes the necessities of life in the future more expensive, number of investment products offered, and and the more conscious people to prosper.
These are some of the reasons why we need a financial planning:
1. To protect ourselves and our families from financial risk
In our life cycle, there are times of rise and fall, and can not be denied regardless of the circumstances of our lives, no doubt it's related to money. The ups and downs of the financial situation we can still overcome with the help of a professional. Some of the important problems and emergencies related to finance, for example: job loss, illness, accidents which cause death and disability, the head of the family as a source of income.
2. To pay off debt
It's very good if we already have investment, like investment on the stock market, property, business or collectable items. But there are still many of us who also have large debts, especially consumer debt. It is actually very important to look for the way out.
But it is not appropriate if we invest each month to accumulate assets but accumulate debt interest rates higher than the results of our investments. Therefore, resolving the debt is the most important thing in a financial plan that we create.
3. For the cost of raising children
These costs include when the child is born, to the cost of the wedding, and cost of education since they entering pre-school to college. As an illustration, if the current tuition is $ 5,000, then with the presence of inflation in the last 15 years the total cost to about $ 7,000.
4. for the purchase of assets, from vehicles to home
The house is a major asset that must be owned by someone, because besides being used as a residence, the house also becomes an asset whose value is increased from time to time. The second asset that we must-have is a vehicles (The vehicle life cycle is about 5 years, so it should replaced every 5 years).
Unfortunately not everyone even when they have a job, can afford to buy a house and a vehicle because the salary is only enough to cover their daily lives. Therefore we need a solution so that the desire to buy can be achieved.
5. To purchase an insurance policy
All the assets that we've collected on essence is to meet the needs of our families, but imagine in the event of an accident, illness or death, which make us can no longer support our families. If that's the case, we need insurance to protect ht person who acts as the family breadwinner.
The next question is whether the insurance held enough have good value to ensure the future of the family life of the deceased. What is the actual value of the insurance to be possessed? What are the benefits of health insurance do we have?
6. Enjoy retirement with a comfortable livelihood
Retirement is the time we enjoyed the rest of the job, surely we want to enjoy with a comfortable livelihood. But where can we get enough money to pay for retirement as we want? It's not convinience that when we retired, we still have to find a job to pay for our lives. It's not right too if we had to rely that costs to our children that may still require money for his own life and his family.
As an illustration, if our current age is 45 years with living cost $ 1,500, so when we retired at the age of 55 years we need to save money $200,000 to enjoy our retirement for 20 years.
7. To inherit our wealth to children
If we already have a financial plan, it means all assets and wealth has been arranged for every purpose. In the end, if we live long and retired, all the wealth that we have can be passed on to our children. Therefore, preparing a will should also be part of the financial planning, so our next generation can enjoy and maintain the wealth we inherit.
So when is the right time to start financial planning? The sooner we start, the better, especially when we are still productive.