Why financial planning is important for your future?

Financial planning is a step-by-step approach to meeting one's life goals. A financial plan acts as a guide as you go through life's journey. Essentially, it helps you be in control of your income, expenses and investments such that you can manage your money and achieve your goals.

Hyderabad: "We do not decide our future, we decide our habits and habits decide our future," the quote by author FM Alexander fits the bill as it is our choices and decisions that determine our destiny. Most people, however, do not care much about this. But, Identifying and overcoming habits that hinder wealth creation, in the long run, is very important.

Be wise while investing:Most of them start investing with someone's advice and they invest in the stock market assuming that it is the right time, But, they are not aware of the ups and downs of the market. Challenges are likely in order to adopt good financial habits. But, only those who overcome initial hiccups can pave the way for a bright future and they will also become successful investors.

Increase savings:Do you have a habit of allocating some of the hard-earned money for yourself? If not, follow it immediately. First, try to save as much money as you can before splurging on things that tempt you. The same principle applies every month. How much you want to save is up to you. Start small and gradually increase the savings. Remember that this will give you financial security and at the same stop taking loans that will not add value to your portfolio. The less money you spend, the faster you will become rich. When you are investing or buying see that they generate some income in the future, or its value should increase. A housing loan is an example. Review your debts at least once a year and see if you can settle any of them quickly. Try to avoid taking loans when offered at a low-interest rate, as the interest rates may gradually be enhanced in the long run. If that happens you will land in debts.

Investment and diversity: Never put all eggs in one basket says an adage. So, never put all your earnings in one scheme, instead of that divide them and put them in different schemes. When all the money is put in one place for high returns, sometimes difficulties are inevitable. Therefore, when choosing investment plans, the risk, costs and taxes should all be taken into account when making a decision. For example, when you want to invest in equities, you have to diversify based on different sectors and market caps. So, build a portfolio to withstand any conditions.

Control over expenses: In fact, when compared to the past, income levels have been increased and it is not possible to live without spending. Changes in our lifestyle are natural, along with increasing income. The secret of financial success is to increase savings as income increases. The difference between urgency and luxury should be clearly identified. Before buying anything we should weigh the pros and cons and see is it necessary, if not can postpone it.

We can rely upon family members on financial issues. They know our strengths and weaknesses. Hence, it is a good habit to discuss with family members before taking a financial decision. Do not forget that the advice of friends and financial experts you trust will give you strength. The aforesaid habits seem easy while reading, but it is difficult to practice. But, financial discipline is a must to be successful in life. Confidence in your plans shows the way for you to reach the top, opines Ajit Menon, CEO, PGIM India Mutual Fund.