Planning plays an important role in our life, be it a Financial Planning, Career Planning, Business Planning, etc. Financial Planning forms an integral part of all types of planning. Efficient planning makes it easier to achieve our goals. The main objective of Financial Planning is to make available the funds when required.
Here we will discuss Financial Planning for an individual.
NEED FOR FINANCIAL PLANNING:
In our life, we have different goals to be achieved. We need funds for our livelihood, Marriage, Housing, Health, Higher education of a child, Marriage of Child, and finally, for our retired life. Funds are required for all these activities. Therefore, meticulous financial planning is needed to achieve the same.
PERIOD OF FUNDS REQUIREMENT:
Funds requirement can be divided into 3 categories i.e., Short Term, Medium Term, and Long-Term requirement – depending upon the period over which funds are required.
Short Term:
Short term funds are required to meet the current expenses up to one year. Usually, these are needed for necessities and unforeseen expenditures.
Medium Term:
Medium-term funds requirement is to meet the expenses required above one year to five years period. It mainly consists of the purchase of capital items of necessities, Education, Medical, etc.
Long Term:
Long term funds are required to meet the expenses to be incurred above Five years. It mainly includes funds needed for the higher education of children, purchase of a house, retirement planning, etc.
