What is the Scope and Importance of Financial Planning in India?

1. Investment Planning

2. Tax Planning

3. Risk Management

4. Retirement Planning

5. Estate Planning

You can fulfil the following objectives while working in close association with a financial planner:

• Determine Financial Standpoint: An expert in this field will help you frame a precise idea regarding your present financial status. While defining this, your advisor will consider all your outstanding liabilities besides calculating the income. 
• Assess Capital Needs: This step is linked to the first one. As the financial plan summarises the estimated expenses, it becomes easy to note down long-term and short-term capital requirements that would beat inflation. 
• Issue Monetary Policies: Here, you decide how to perform credit control, when to shift allocated funds to safer investment instruments, what insurance products to buy, etc. 
• Ensure Proper Utilisation of Available Resources: A financial planner strives to look for opportunities to deploy your least utilised resources to generate the best possible ROI.

You need to realise the importance of financial planning if you ever thought about making a budget and living life accordingly. Here, we have discussed them in brief to help you make better investment decisions.

• Initiation and periodic revision of financial planning help eliminate uncertainties which would otherwise restrict growth opportunities. Precise long-term vision allows you to make bold moves without worrying about short-term consequences
• A financial plan drawn under expert guidance ensures adequate funds are available to fulfil milestone needs and wants. For instance, when planning to have a kid, you can start saving for their educational expenses and invest likewise to allow the money to grow over time.
• Consistent stability in the standard of living is a major significance of financial planning. By implementing principles of financial planning, you are able to roughly predict cash inflow and outflow, which in turn can help you reduce dependency on various credit facilities.
• Corporate firms must opt for regularised financial planning services as it helps them to assess a perfect time to launch expansion programs.
• Again, financial planning is beneficial for companies as it helps in discovering their relationship status with partners and suppliers. Too high debt ratio or a disrupted cash flow automatically indicates something is wrong in the system, and it needs to change soon to avoid a financial crisis.

Any composite financial planning process must cover the following steps to formulate an ideal roadmap ensuring your financial wellness:

Step 1: Judging the present financial condition

Step 2: Finalising the risk endurance limit

Step 3: Setting both short-term and long-term measurable goals 

Step 4: Diversifying investments as a part of contingency planning

Step 5: Monitoring the plan and making necessary changes

As we can confirm now, the necessity of financial planning is vast in India, and its emphasis is growing steadily as financial literacy has increased. More people now stress the importance of financial planning and head to financial advisors for customised wealth creation strategies. If you are presently in a dilemma on managing your funds, refer to the tips mentioned above to maximise the chances of attaining all your life goals.