If you are an Indian and wondering why you lack financial planning when setting life goals, read through to know more.

 Financial Planning

This article briefly explains what happens when an individual misses a SIP, covering the following points:

  • What is financial planning?
  • What is the importance of financial planning?
  • Do Indians lack financial planning for their life goals? 

Also Read: Individual Retirement Accounts

What Is Financial Planning?

Financial planning is a way of creating a roadmap for your finances in the future. A financial plan helps individuals track their expenses and work on them, which enables them to achieve their financial goals.

Also Read: Term Life Insurance

What is the Importance Of Financial Planning?

  1. Emergencies: Creating a well-structured financial plan helps you start saving and working for your financial goals early. It ensures that there is money available for emergencies.
  2. Savings: Preparing a proper financial plan helps you cut down on unwanted expenses and utilise the money for savings.
  3. Improved Standard of Living: When you don’t have a financial plan, your expenses often go haywire, affecting your lifestyle. However, with a financial plan, you don’t have to compromise your lifestyle as you continually monitor your finances. 
  4. Sense of Peace: With a financial plan, you don’t have to worry about your future constantly. A well-designed financial plan helps you manage your money efficiently, reduces stress, and allows you to live peacefully. 

Also Read: Responsible Investing

Do Indians Lack Financial Planning in Life Goals?

A portion of the Indian population is unaware of the concept of financial planning. On the other hand, half of the Indian population willingly avoids going for financial planning due to the risk constraints, despite the awareness. 

According to a survey, above 75% of adults in India do not adequately understand the basics of their finances.

How to Successfully Plan Your Finances?

  1. Understand: The first step to making a financial plan is understanding your present financial situation. It determines the areas that are doing well and the ones that are not. 
  2. Note: After understanding your financial situation, list all your achievable and practical financial goals. It is a good idea to avoid listing impractical goals. 
  3. Communicate: Communicating with your family members and advisors is a crucial step. It helps you broaden your thoughts and clarify what you are looking for. 
  4. Explore: Exploring various options once you finalise your goals is essential. In the exploration process, you learn the ways that are good for you and those that aren’t. By doing so, you reduce the chances of your financial plan failing. 
  5. Implement: Upon deciding the best-suited option for you, you must implement it wisely. Take it slow. Give your plan time if you are debating about it. 
  6. Surveil: An essential step to a successful financial plan is continuously monitoring it. Tracking your finances is crucial, as it helps you stay focussed and stick to them.

Indians, irrespective of their rising aspirations, lack financial planning. A study shows that about 40 percent of the Indian population chooses financial planning. The remaining 60 percent choose not to go for financial planning. The reasons for this could be anything from unawareness to lack of belief to safety from risks. 

Know More: Why Indians Lack Financial Literacy


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