How to increase your wealth without an actual increase in earnings?

The Steps to Building Wealth without an actual increase in earnings is Smart and feasible Financial Planning. Finances play a very crucial role in every person’s life from personal to professional so it becomes very important to have it all sorted before one set into something as it will decide what lies ahead in the future. Financial planning is important from both personal and the business aspect.

Introduction

The process of financial planning should help you answer three questions. Where you are today, that is, your current personal balance sheet, where do you want to be tomorrow, that is, finances linked to your goals, and what you must do to get there, that is, the asset allocation and investment strategy that will help you achieve your objectives.

Steps to Building Wealth: Financial planning

Personal financial planning is important to achieve what 1% of the world’s population have (Financial Freedom), you must be willing to do what only 1% dare to do. The stability of the personal status of individuals and families is directly related to the stability of their financial condition.

Benefits of Financial Planning

• Future visibility: It gives assistance in visualizing finances for the next 10-20 years of your life.
• Family security
• Emergencies: There may be unexpected and unavoidable times ahead that could become obstacles before your finance goals. Proper financial planning allows you to be ready for such times without disturbing your primary objectives.
• Retirement planning: It helps to maintain your lifestyle through your working life and throughout retirement as well.
• Tax Saving
• It helps to determine short and long-term financial goals and then create a balanced plan to reach those goals.
• Financial understanding: When the measurable financial goals are established, the effects of financial decisions understood, and their results are reviewed, financial understanding could be achieved. It also gives a new perspective to budget, further, putting a control on financial lifestyle.
• Childs Education
• Improved ROI (rate of interest) on the portfolio: Proper financial planning takes into consideration several aspects such as risk management, investment planning, liquidity management, liability management and goal planning. It allows you to design your integrated investment plan which takes into consideration your goals, risk appetite and available liquidity hence helps to improve the ROI on your portfolio.
• Enhances risk management: With a proper financial planning, you could determine the insurance coverage you require with better certainty.

Developing a Financial Plan

• Understanding your future: what is important to you?
• Determining your current financial situation with regard to income, savings, life expenses, and debts.
• Build a financial plan
• Creating direction in life: managing risk, tax planning, lifestyle, estate, retirement etc.
• Making intelligent and realistic choices.
• Achieve your goals: what action do we need to take?
• Evaluate courses of action, considering your life situation, personal values and current economic conditions.
• Implementing the plan: monitoring and evaluating.
• Revise your plan.

Takeaway

Financial planning is about looking at all elements of a person’s financial life and coming up with a plan to help you as an individual meet your responsibilities and achieve your goals. Financial planning gives you a clear view of what the risks and prospects are before you launch any business. Further, the 50-30-20 rule intends to help individuals manage their after-tax income so that all the expenses are widely covered, money is saved for retirement and along with that at the same time doing what gives happiness.  As financial planning is a very personal exercise, one needs to look towards its course of action. It is essential for both service people and businessmen apart from every individual. There are many financial planners and advisors out there with tremendous knowledge and experience to help people and business to deal with these matters so as to save one’s ship from sinking at the later stages of their lives.