Understanding Financial Planning and How to Prepare It

Lovata Andrean

Explanation of Financial Planning and How to Prepare It 1
Explanation of Financial Planning and How to Prepare It 1

Rancakmedia.com – According to the Indonesian Financial Planning Standards Board FPSB The definition of financial planning is a process of achieving one's life goals through integrated and planned financial management.

You will often hear the words 'Financial Planning' when you enter the world of work and start making your own money. However, not everyone really understands and not many people apply the concept of Financial Planning. Financial Planning is very important to achieve the desired financial goals.

Financial Planning or Planning Finance It will also help you to identify which desires need to be postponed and prioritized. One person's financial planning differs from another's based on each person's financial situation and what goals they want to achieve.

You will understand what Financial Planning is and how important it is for everyone to make Financial Planning from now on, after reading this article.

Complete Understanding of Financial Planning

Before you go any further and explain how important Financial Planning is, what its advantages are and how to make the right Financial Planning, you need to first understand the concept of financial planning.

Financial Planning is a process in which a person tries to achieve different personal financial goals by implementing and developing a financial plan.

It is the process of simplifying a family's income, expenses, assets and disparate responsibilities to manage present and future needs. This includes Financial Planning. Simplification definitely seeks to achieve each individual's financial goals.

Financial Planning must be seen as a continuous process. They must create financial strategies to ensure that their economic situation remains stable as long as people are around.

If one financial goal is achieved, another major goal will emerge. Not only that, financial goals also tend to vary depending on a person's financial situation, lifestyle and needs.

For example, the needs of an individual are different from the needs of a married person. The same goes for financial goals. The financial goals that a person wants to achieve before and after marriage are very different and their priorities are certainly different.

Elements of Financial Planning

There are many elements in Financial Planning. Elements to pay attention to include:

Financial Goals You Want to Achieve

It's a good idea to explain your financial goals in as much detail as possible so you can determine what actions need to be taken to achieve these goals.

Time Period Required

When applied to your financial plan, the sooner the better. Determine the target time to achieve the goals you have set in the previous point. This will make you more.

Action plan

A plan will not be completed if concrete action is not taken to achieve the goal. Clearly and realistically define short-term and near-term actions. Make sure you get closer to your goal every step you take.

Financial Resources

Of course, what is called Financial Planning must be a financial source that becomes the "engine" for all your goals. These resources can take various forms, such as income, discretionary income, operating profits, stock dividends and more. Financial resources will be directly related to your future financial goals.

Risk Factor

Consider all the dangers associated with the plan when doing Financial Planning. Risk considerations are often linked to financial resources. For example, if the main resource is a monthly salary, then the associated risk element is whether you one day get fired from your job or retire.

The following five elements are important and influence each other. If only one aspect is missing, Financial Planning will not be built well.

Why is it Important for Financial Planning?

Those of you who are new to Financial Planning will definitely wonder why anyone prepares. Have you ever forgotten and been confused about where all your money went, if you are someone who doesn't understand the importance of Financial Planning?

After you earn a monthly income, your money is almost gone without you realizing it, but your savings are minimal. Financial Planning is different from tracking expenses. Financial planning is much more complicated because it includes the goals you want to achieve financially.

Understanding Financial Planning

So, this is where Financial Planning is important. You need a financial plan to achieve all your financial goals. This will prevent you from spending more money than you have to and more than you can. A happy and successful life will be a dream that will never come true without adequate financial preparation.

Financial Planning is also one of the greatest protections for everyone. We never know everything that will happen in the future. For example, no one can promise that, even if you currently have a stable job with a good income, you will not lose your job.

Who knows, your business will have to reduce its staff and you will lose your job. Or you have an accident that requires you to stop working for a while. If you have a mature financial strategy, during this crisis, you don't need to worry about your life. Even if your financial situation worsens, you can still meet your family's daily needs.

Also Read


Lovata Andrean

Hi, I'm Lovata, I'm not Ai but I am a content writer for SEO, Technology, Finance, Travel, Cooking Recipes and others. I hope this can be useful for all my friends. Thanks