We have often been told and reminded that financial planning is absolutely necessary if you wish to have a blissful retirement without having to worry about your finances during your golden years. If you are new to the concept of financial planning, then it will help your understanding of the financial planning basics by discussing the following six financial resolutions which you should seek to make your financial planning work towards your retirement needs.
Firstly, financial planning is about getting your spending under control. It takes sheer will power and discipline to budget but it is the sure way to ensure that your fund inflow is greater than your fund outflow. This is the first financial planning basics that you should know and your first financial resolution that you will have to make if you are really keen on your retirement planning goals. Ensuring that you have cash surplus rather than cash deficit is an important principle of financial planning for only when you have cash surplus are you able to move on to investing your savings for better returns.
For those who are in debts, however, the next logical financial resolution is to pay off your debts. Credit card debts are a common bane amongst the younger generation due to the easy availability of the credit cards and the easy repayment terms imposed by the credit card companies. Just as the power compounding interest can help your savings grow; it can do great damage to your debt liabilities if your debt is not paid off early.
Once you are debt free and your cash inflow is higher than your cash outflow, you would be ready to resolve to put aside an emergency fund to be used in the event of any emergencies, such as medical treatment or loss of job. As this fund has to be liquid, parking the funds in fixed deposits and savings accounts would be the logical option.
Your next resolution would obviously be to set up an investment fund for all your financial needs such as your children education and retirement fund. Due to the very low prevailing interest rates for savings and fixed deposits, it is simply imperative that investment into the financial market is necessary to ensure that that the rate of return of your savings will be higher than the rate of inflation. Failure to do so will see the value of your savings shrinking when you retire.
Protecting your family is another important financial planning basic that you must be aware of. The important role of life insurance cannot be forsaken for having the right protection will mean that your family will still be financially provided if any unexpected events happen to you. Just like life insurance, due to the ever rising cost of health care, health insurance policies for your whole family are necessary financial planning requirement.
The one other financial resolution that you must make is to ensure that you make a will. Making a will is necessary to avoid any delay in the distribution of your assets to your family in the event of unexpected death.
The six financial resolutions described above basically explain the financial planning basics. They are certainly worthwhile resolutions to keep and honored if you are planning to achieve your financial freedom.
Seeking Financial Freedom? Work On The Financial Planning Process For The Road To Financial Freedom
Financial Planning Advice for Couples
High divorce rates used to be a common phenomenal in the west. This phenomenal has now caught up with Asians as well, and the divorce rates in Asia and many parts of the world too are now just as high as in the west. It has been found that one major factor leading to the high divorce rate is the issue of money or rather the lack of it. Many couples do not talk about money and money management before they get married. They were too preoccupied with the topic of love, intimacy and the enjoyment of been together; they were also busy with their wedding plan.
The sad truth is that after marriage, couples continued to avoid the topic of financial planning and money management. It appears that money is a taboo subject which often led to unpleasantness, arguments and misunderstandings between the spouses. The challenge therefore is for married couples to break through this barrier to seek financial planning advice and to learn money management together as a couple to work towards marital bliss and in the process work towards their financial goals and retirement.
Married couples must learn the basics of financial planning, which includes managing money together. Seeking the service and advice of a professional financial advisor will ease the financial planning process but if cost is an issue, working the steps listed below together as a couple will certainly be useful in their quest for a better control of the finances and a better understanding of each other.
1. First and foremost, know each other financial health. Many a time, couples do not reveal their finances to each other, thus creating an atmosphere of distrust and misunderstanding, which sometimes is amplified by the interfering in-laws. Having an open book will help the financial planning process easier.
2. Working through the budget for household expenses is of utmost importance. Joint contribution and responsibilities towards household expenses, especially if both are working spouses can create better harmony and understanding in the house. Do discuss each other spending habits but avoid criticism. Avoid dictating each other spending habits unless it is truly excessive. Joint contribution to a common fund for expenses and investments and having an allowance for each other for their other expenses would be the best arrangement to avoid unnecessary conflict.
3. Discuss the common financial goals such as tertiary education for the children, buying a bigger house, travelling round the world or early retirement. Knowing your common goals will help you lay out a workable and realistic financial and investment plan. As mentioned above, having a joint education fund as well as a joint retirement fund is probably the right direction to take. The financial needs analysis helps to provide the couple a clear picture of the financial path they need to take.
4. The low interest environmental that is prevailing all over the world today makes investment into the financial market a necessary option if you are seeking financial freedom. Leaving your money as low interest deposits in the bank will expose you to the perils of inflation and insufficient funds for your retirement years. Therefore having the right financial education and a firm commitment by both spouses towards a long term investment plan is imperative in achieving the financial objectives.
5. Insurances play an important role in any financial plan, more so if the contributions are necessary from both spouses. Any unforeseen mishaps can make an enormous dent to the financial and investment plan if the contribution is reduced to only one source. The purchases of life insurances for both party, medical insurances and other insurances are necessary in managing risks that may wreck havoc to the serenity and security of a happy marriage.
6. Just like insurance, a financial plan is not complete with estate planning. It is an essential element for the security of your loved ones.
The statistics of the rate of divorce mentioned above is certainly alarming. If money issue is a major factor, then the emphasis on the right financial planning advice and the learning of money management for married couple cannot be more correct and accurate to bring the statistics down.
The sad truth is that after marriage, couples continued to avoid the topic of financial planning and money management. It appears that money is a taboo subject which often led to unpleasantness, arguments and misunderstandings between the spouses. The challenge therefore is for married couples to break through this barrier to seek financial planning advice and to learn money management together as a couple to work towards marital bliss and in the process work towards their financial goals and retirement.
Married couples must learn the basics of financial planning, which includes managing money together. Seeking the service and advice of a professional financial advisor will ease the financial planning process but if cost is an issue, working the steps listed below together as a couple will certainly be useful in their quest for a better control of the finances and a better understanding of each other.
1. First and foremost, know each other financial health. Many a time, couples do not reveal their finances to each other, thus creating an atmosphere of distrust and misunderstanding, which sometimes is amplified by the interfering in-laws. Having an open book will help the financial planning process easier.
2. Working through the budget for household expenses is of utmost importance. Joint contribution and responsibilities towards household expenses, especially if both are working spouses can create better harmony and understanding in the house. Do discuss each other spending habits but avoid criticism. Avoid dictating each other spending habits unless it is truly excessive. Joint contribution to a common fund for expenses and investments and having an allowance for each other for their other expenses would be the best arrangement to avoid unnecessary conflict.
3. Discuss the common financial goals such as tertiary education for the children, buying a bigger house, travelling round the world or early retirement. Knowing your common goals will help you lay out a workable and realistic financial and investment plan. As mentioned above, having a joint education fund as well as a joint retirement fund is probably the right direction to take. The financial needs analysis helps to provide the couple a clear picture of the financial path they need to take.
4. The low interest environmental that is prevailing all over the world today makes investment into the financial market a necessary option if you are seeking financial freedom. Leaving your money as low interest deposits in the bank will expose you to the perils of inflation and insufficient funds for your retirement years. Therefore having the right financial education and a firm commitment by both spouses towards a long term investment plan is imperative in achieving the financial objectives.
5. Insurances play an important role in any financial plan, more so if the contributions are necessary from both spouses. Any unforeseen mishaps can make an enormous dent to the financial and investment plan if the contribution is reduced to only one source. The purchases of life insurances for both party, medical insurances and other insurances are necessary in managing risks that may wreck havoc to the serenity and security of a happy marriage.
6. Just like insurance, a financial plan is not complete with estate planning. It is an essential element for the security of your loved ones.
The statistics of the rate of divorce mentioned above is certainly alarming. If money issue is a major factor, then the emphasis on the right financial planning advice and the learning of money management for married couple cannot be more correct and accurate to bring the statistics down.
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