For most people, financial planning is something that they do so that they can stay on top of their bills. True, carefully planning how you will spend your money will ensure that your mortgage is paid every month, your credit cards are settled, your school tuition is paid, you have investments and you don’t fall into debt. What you may not realize is that there are hidden benefits of financial planning: From now on, every time you sit down to plan how you will spend your paycheck think of the following:
- You become highly adept at managing money. A good financial planner will be able to make do even when they are earning less. This is because they have trained their brains to spend on only what is important. Each time you plan you develop your financial muscle, and the stronger it gets the better you become at managing money.
- As a good financial planner it is only a matter of time before you have healthy investments. If you don’t waste money you will always have some left over that you can invest. You may start by making small investments but over time you will find that you have more and more money that you can invest.
- The more you invest, the better you get at doing it. Many people who lose money on investing are either new to it, or they are not very good financial planners to begin with. If you have trained yourself to be careful with your money you will never invest until you are sure that you are dealing with a sound proposition. You will not invest in a venture just because others are doing it – you will be guided by solid metrics.
- A good financial planner is also better organized in their life. They are able to think about the future and set aside money for important undertakings. An organized life means considerably less stress, and you do not indulge in impulse spending.
- As a parent, one of the qualities you want to pass on to your children is good financial management. When your children see you carefully planning your income they are learning valuable lessons that will serve them well in the future.
- Good financial planners make sure that they distribute their assets so that in the event of death they do not leave their loved ones in disputes. It also ensures that every part of the estate is left to those who deserve and need it the most.
One commonly asked question about financial planning is whether there should be any money set aside for leisure. Leisure is indeed important and it should not be cast out just so that you can become a shrewder financial planner. That said, you should always enjoy activities that are within your means. Don’t book a holiday that will swallow up half your paycheck or savings – when you get back you will have to fill the hole that you created and this can leave you feeling extremely stressed.