Financial Planning for Beginners: Step by Step Guide

Have you ever heard people saying or even wondered yourself? How can I save more money? Well, in this article we are going to talk about personal financial planning and you will get to learn about finances. It can help you figure out how to double or triple your income beneficially. Personal financial planning/ process of financial planning is about managing your capital which is a comprehensive evaluation of your income and your future personal financial status.

Steps of Financial planning will help you to learn about finances to sort your finances in a better way by obtaining and protecting your financial resources. It helps a person evaluate or monitor their spending expenses. Personal financial planning will help you gain more tax benefits while enjoying your income and spending.

 There is an increase in awareness of personal finance now, making every individual attain their potential financial goals. It provides a sense of freedom while protecting you and your family from any financial emergencies.

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What is Personal Financial Planning?

The process of financial planning starts with collecting your funds and analyzing them to assess your financial status. You can then budget your financial planning accordingly. The most important step in the process of financial planning is to implement all the measures that can organize your capital to maintain your financial status when you grow old. Planning your investment, education, retirement, marriage, travel expenses, tax benefits and funds development comprises your personal financial planning/ process of financial planning.  

One has to learn about finances for good financial planning steps to be followed.  Financial resources when added with financial techniques give you the perfect financial planning steps. It is a process to organize your funds/finances.

The process of financial planning starts with collecting your funds and analyzing them to assess your financial status. You can then budget your financial planning accordingly. The most important step in the process of financial planning is to implement all the measures that can organize your capital to maintain your financial status when you grow old. Planning your investment, education, retirement, marriage, travel expenses, tax benefits and funds development comprises your personal financial planning/ process of financial planning.

It is very important to set financial objectives to achieve your financial goals. This article will guide you to learn about finances in the best aspects of personal financial planning/ process of financial planning.

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Objectives of personal financial planning-

We all have one thing in common- To get rich is like a dream for most of us. Well, if we say it is achievable, you might not believe us, but it’s true. That is possible only by keeping some objectives clear for financial planning. Let’s discuss them in detail:

Analyzing the finances– It is the first step in financial planning steps. By analyzing your finances, we mean looking at your finances in a way that you can plan out short-term or long-term expenses. For example, what is important and what is not important in their life Will make you understand If you need funds to fulfill your goals.

Create a budget- It is the second step in financial planning steps/ steps of financial planning. This objective determines the debt-to-equity ratio for short-term and long-term financial decisions. You will have to decide on a budget for all kinds of expenses.

Financial policies- It is the third step in financial planning steps/ steps of financial planning. This objective will determine your decisions regarding lending money or borrowing money regardless of the cash flow or financial resources.

Monitor and re-budget– It is the fourth step in financial planning steps/ steps of financial planning. If the finance module prepared is good enough then you can monitor and re-budget your assets to get more returns even after paying taxes.

Financial planner-  This step is an additional step in financial planning steps/ steps of financial planning. The objective of the financial planner is to make sure that in less money you can have maximum benefits or maximum fun. The financial planner is an executor who will be able to make finance modules that will be beneficial to you.

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Importance of personal financial planning

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The importance of personal financial planning determines your personal and financial growth.  It can be understood by considering its benefits such as:

It gives direction to your goals or dreams.

It facilitates your cash flow.

It manages the spending of your funds.

It helps to raise your financial status.

It cultivates profits.

Prepare your financial status for any kind of emergency.

Protect you from any kind of uncertainties of funds.

Reduces wastage and provides benefits.

Find out the balance between investments and financial decisions.

Regulation of the funds in a wise manner.

Planning of future financial status in different situations.

Plans for retirement and manages risks.

It manages tax benefits.

These are all the benefits you get if you learn about finances early.

Process of financial planning

From debt-free finances to achieving financial goals comes under the process of financial planning. Let’s try to learn about financial planning steps now. These steps of financial planning also help you learn about finances.

Establishing Financial Goals-You will have to first understand your personal and financial situations. Followed by identifying the goals you want to set for your financial planning.

Financial Strategy- Analyzing the course of alternatives that have to be followed to achieve financial goals for the future and drafting the correct way of investing into the future.

Drafting and Implementing Finances– For personal financial planning/ process of financial planning, developing and executing the financial policies is mandatory. Implement all those financial policies that you set for your future goals.

Monitor Inflation and Re-budgeting– Monitor your financial growth from time to time to get the maximum benefits, including tax benefits to make sure your investments are inflation-proof.

 Hope you can understand and learn about financial planning steps for financial independence.

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Example Of Personal Financial Planning Process

The earlier you start planning your finances, the earlier you start collecting the benefits. Let us explain the process of the financial planning process to you with the help of an example.

The first step is to be debt-free or pay all the outstanding amounts on all of your cards. Paying all the loans and having a regular cash flow will ensure that you have enough funds accumulated in your account.

This second step will be making sure to have the regular cash flow or income or savings that will go under budgeting your finances for the future. A small amount or a small section of this regular cash flow will go towards investing and planning your financial growth.

The third step is to make sure that you are using a systematic investment process. That means you have to start investing in assets like gold in any form, Shares in companies, investments in real estate, government bonds, etc.

All these three steps will teach you your risk evaluation. These all measures will transform your funds from dreams into reality. The steps of financial planning will help you draft your financial goals.

 Why is personal finance planning important?

Financial planning is just like farming. You sow today and you reap the fruits or the benefits of financial planning tomorrow. Gone are the days when we used to receive pensions from the government to access financial freedom when we retired. Nowadays everyone has to make their own well of funds to help themselves and their families in future to meet any financial requirement. Hence, financial planning is our utmost requirement today. It is the only way with which we can secure our future. Understanding why we have to start financial planning is the 1st step towards receiving our financial benefits in the future. Regardless of the cash flow/income; it is important to create a healthy habit of planning finances. Planning alongside a financial planner will let you create fancy sums for rainy days too. Therefore, personal financial planning is important. It is the best way to achieve small or big, short-term or big-term finances.

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Top 5 personal financial Planning apps 2022

The table contains the top 5 personal financial planning apps and their features:

Name of the AppFeatures
Acorns AppVirtual piggy bankSaves money automatically while you do the shopping.
Pocket GuardHelps to monitor income and expenses.Offer low-rate financial services.
Digit AppMonitor spending habits and transfer money from your bank account to your Digit Account.
GoodBudget AppVirtual envelops for different purposes like rent, groceries, vacations, etc
Qapital AppFDIC insured accounts.Rounds up the price of the product you buy and saves the extra.

FAQs: Financial Planning

Q2. What are financial planning steps/ steps of financial planning?
A2. Analyzing the finances, creating a budget, creating financial policies, monitoring, re-budgeting and, hiring a financial planner are the planning financial steps.

Q3. How to learn about finances?
A3. Starting early will lead you to learn about finances.

Q5. What is the process of financial planning?A5.
From debt-free finances to achieving financial goals comes under the process of financial planning.

Q6.  Why is personal financial planning important?
A6. To have a better future and present expense freedom, financial planning is important.

Q7. What are the benefits that a financial planner provides?
A7. A financial planner has a positive approach towards setting a finance module that could benefit their clients in achieving their financial goals in the future.

Q8. What is the process of financial planning lead to?
A8. The process of financial planning leads to identifying the situation of your finances and determining your financial goals.

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