Friday, August 24, 2012

The Importance of Good Financial Planning

I clicked the start button of Bridgette (my laptop), opened the MS office application for Excel, and drafted a spreadsheet of how I would allocate my funds to arrive at my net worth.  It was a short-term planning, approximately one year financial plan, incorporating all the external factors that would influence my budget and fund allocations in the coming months.  In going through the journey of personal finance, having a financial plan plays an important factor at the starting stage.

I clicked the start button of my work laptop, opened the MS office application for Excel, and drafted a spreadsheet of a financial budget that I would allocate to my team before we start on our fieldwork with our next job client.  As much as we ensure that quality is being undertaken in the job, at the endpoint, the efficiency performance of the budgeted versus the actual results of our fee recovery still has greater bearing, internally speaking.  Hence, financial planning of the job budget is an important factor to always consider at the planning stage.

It may be about the nature of our work.
It may be on our own personal budgeting plans.
It may be about our businesses – small or big.
It may be about pursuing our passion, going into college, learning new skills by enrolling in seminars or schools.
It may also be on a club or organisation or institutions that we are involved in, or a school project.
...wherein financial budgeting plays an important role – and surely, you would agree with me that financial planning is ongoing all throughout the phases of whatever we get into – and is important that it should be done at the very FIRST stage, before we start going on with the tasks.  

Whatever we want to do – it may be small or big, we still have to use money in order to push through with our plans.

Financial planning is crucial to the success of whatever it is that we want to get into.  The best is when we write it on PAPER, or type it in the spreadsheets in our computer.  Putting something where we can always see them contributes to the likelihood of achieving our plans.  Here are the benefits of good financial planning:

·        Paper-written financial plans most often provide a likelihood of achieving them, compared to unwritten ones.  It gives us psychological effect that our financial plans and objectives always “exist” – that we can tangibly see them.  This makes us more effective in achieving these plans.

·        Analysis of the risks, internal and external factors and other uncertainties included in our financial plans most often leads to better-quality decisions on our part.  We have forecasted and prepared for these factors, hence when they happen, we surely have plans in order to mitigate them.

·        Purpose.  Making a good financial plan gives us a sense of purpose of why we are doing it in the first place.  It gives us clear direction of where we want to go and what we want to achieve.

·        Encourage creativity and initiatives.  We can always revise our financial plans after considering the factors that can affect it.  It gives us a push towards what actions to take on our finances and our own ideas (and that of other people) that we want to get into in order to be on track of our plans.

·        Response to changes – the most constant thing in this world.  No matter how fixed our financial plans are, we always got to adapt to the changes in our environment.  As I have earlier mentioned, financial planning is done all throughout the cycle (it just important to do it at the beginning).  It helps us to see possible areas for growth and drives our attention to keep on changing – hence we need to adapt in order to survive.

How are you with your financial plans? Write them now on PAPER. =)

Keep learning and keep on moving forward!

Lyn-Lyn \(“;)/

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