What is Financial Management?

               Recently the world is facing damage of corona virus. This pandemic only affect the human life but also damage our eoconomy. Economy face a massive flactuation because of the Covid-19 pandemic. during this pandemic everyone realizes that the money is the major solution for such problems. Now the people realizes that  Financial Management is very important factor in our life.

             Here I am telling you about management of money during such economic problems. In such times, effective and smart financial management has become the need of the hour.

What is Financial Management?

         In simple words, Financial Planning is  the process of Managing your income and your expenses.

         Financial Planning is a systematic approach whereby an individual maximizes the existing financial resources through proper management of one's finances to best achieve his/her financial goals and objectives. 

Importance of Financial Planning: 

        Lets see Why the Financial Management is so important in everyone's life.

1. Set Your Financial Goals

If you ever consult a financial planner or CA, they may be asking you what your financial goals are. Most us waste more time on planning their holidays than for our money management and having a financial plan will help us to set our goals easily.

2. Manage Your Income

Yes, it is possible to manage income more efficiently through a well defined budget. All you have to do is to make a budget so that you don’t have to take stress if you have the money as you already know. Planning and analysing your budget will help you to give priority to your spending and identify non essential expenses, adapt quickly as your financial condition changes, and achieve your financial targets.

3. Analyse Your Goal Achievement

Once you have put a financial plan in place, you can set up measurable goals, such as regularly contributing a typical amount of money toward a savings account or repayment of debt over a period of time. Having a personal financial plan will help maintain balance towards maintaining within set targets and eventually leads to achieving the set goals.

4. Financial Understanding

Because of a good financial budget, you are in a better place to analyse your financials through the set measurable financial targets and the effects of decisions made. If you see, financial planning can give one a whole new approach to their budget and ways of increasing control over personal financial lifestyle.

5. Keep Balance Between Assets and Liabilities

 A proper financial plan will guide one on the best means of settling the liabilities and in the process helps one to own assets that do not become a burden in the future.

6. Emergencies

We have to do proper Savings to stand stable in Emergencies. However, sudden economical accidents can harm you badly if your savings are not adequate. My personal opinion is, it is always better to have specific investments with high liquidity that can be heplful at the time of emergency.

All in all, it is advisable for everyone to engage a professional financial advisor for proper guidance on creating a financial plan and to start achieving your financials goals. Making a financial plan can be time-consuming and may require to identify some financial realities that you have been ignoring, but it is helpful in the end. Once your plan is complete, you can begin taking require steps to ensure that your finances are in order and running without problems and with no doubt, you live a peaceful life with few surprises.

How to do proper Financial Management?

     Are you someone who recently started earning money or  about to start earning money then this following tips are important for your financial management. 

Do you know that every year in India many people fall into to financial traps. So this post is specially applicable for those who recently started earning because they have no clue what to do about their money.

Here are some Best Tips for Financial Planning:

• Do not confuse in insurance and investment. Always take a term plan which is the purest form of insurance which would be available at a very low annual premium
• Avoid the debt traps. Please keep watch on hidden disadvantages of various credit services. 
• Avoid keeping more money in your saving account. The reason is that when you keep your money in the saving account you will get interest in the range of 2.5  percent to 3.5 percent per year but the inflation rate in India is almost around 5%
•  Take a medical plan. Medical plan is very important because it helps us while medical emergencies. The time you start earning you should choose a medical plan. Many people in India lose their lifetime saving just because they don't purchase a medical plan. So make sure that you take a medical plan at a young age because at the young age the premiums are low. 
• Make an Emergency Fund. Always keep in mind that you should prepare an Emergency Fund which is of almost six to nine months of your monthly expenditure. You can deposit this amount in FDs or you can keep it in low risk debt instruments like your money market fund or liquid fund. 
• Avoid wasting your money on things which are only meant for showing luxury life status. I know people who earn one lakh per month but in spite of that they are confuse about their money at the end of the month, because of lifestyle inflation so if you want to live a financially stable life always avoid this lifestyle inflation.
• Avoid too much overuse of social media. It is studied that social media is indirectly a big factor in influencing your buying decision.
• Increase your income. Do not depend on only one source of income, try to make various ways of income other than your salary. 
•  Do you know the Power of Compounding? Power of compounding is one of the wonder of the world. For this you just need to invest in defined manner and keep patience for your money to grow.
• Invest in knowledge and learning. Invest your money and time in learning new skills which can be helpful for increasing your knowledge and and finally income.

             I hope, now you get clear idea about the Financial Planning. Enjoy your life with benefits of Financial Management.

             Please Comment your opinion and Share this MoneySutra..❤