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Financial Planning High Risk
3/12/2018
What is Financial Plnning
Financial planning is a process of managing one’s finances in order achieve one’s goals and dreams. It is a process that helps us not to get into unnecessary debt. Good financial planning will always help us in looking ahead and avoiding spending money in a way that will lead us into owing more than what we have, spending more that we earn.
What is Financial planning
The main objective of financial planning is to achieve financial independence as well as reducing uncertainty.
When you engage in good financial planning, you will see the money pits and avoid them.
Benefits of Financial Planning
Financial planning goes a long way in making money work for you. There are three benefits that come because of financial planning and they are:
1. Freedom from financial worries
2. Avoiding excessive debt
3. Avoiding bankruptcy
Freedom of Financial Worries
Financial planning involves planning for a rainy day. Saving money for a known use in the future as well as an unknown use in the future. If an unforeseen event takes place, you will not be worried because you know you have money in your reserves to help you through these events without having to borrow or take from your savings
Avoid Axcessive Debt
Budgeting helps us to know exactly how much money we have and need to spend. Often a lot of people do not know how much they have at a given time. They are only surprised when the bank declines their payments. As a result, they end up borrowing.
Avoiding Bankruptsy
A budget is a very good tool for control of your finances. If the actual expenditure exceeds the budgeted amounts as result of price increases, the budget holder would simply adjust the expenses to meet the income. Without this tool people may end up bankrupt because of spending what they do not have.