What is the Right Time to start Financial planning? Many people connect this with age and say that they are too young or too old to work on any financial planning exercise, and some link this with Money, and say they do not have enough money or assume to have enough to fall into any kind of financial structure.
Call it confusion, excuse, reasoning or justification, which does not let many people follow this disciplined process. And even if they know that they need some financial discipline in life, they keep delaying it for the search of the right time, and they never get into a structure as the right time never comes.
And when there is no clarity of the things, it is normal to look for easy solutions like investing for now and putting the planning part at the back burner. Sellers take advantage of this behaviour and that’s why come up with their sales proposals or products in the packaging of financial planning. This gives you temporary satisfaction that you are on the right path until you face the aftereffects and realize the mistake.
Without getting much into the details of financial planning and who are the authorized professionals to help you get into a process, to keep the focus right I will stick to the main question – When should one start doing Financial planning? (Read: The Real Financial Planning)
See, there are 2 different times when it is best to start with financial planning, and this does not depend on the age or income.
The first one is when you take your first step into your financial life i.e. when you start earning. The moment you get your first paycheck is the time to start thinking about how best you can use the same to build your financial future.
This is the time when you are going to build your financial behaviour.
You would get tempted to spend more; you would be offered with credit cards from your bank. (Read: 7 financial planning tips for beginners)
With credit cards, your spending capacity widens and you may tend to further spend more to take benefits of cashback, reward points or no-cost EMIs.
You may even like to fund your Travel through EMIs, and all this will result in your savings go haywire. Slowly you will find your credit score getting ruined, and you may not be able to get a loan when you need it the most. (Read: How to check cibil score online for FREE)
Like every beginner and many experienced too, when you are not following an investment approach and when your employer asks to submit your tax-saving proofs, you will ask your banker or your colleagues who have already been sold by those bankers as to what should you do. You may ask your parents, friends and all this make you end up investing in some ULIP, Traditional Insurance Plans, ELSS Mutual funds, PPF etc.
Without understanding the impact of these products on your financial life and how these are going to help you achieve your goals, you invest in them.
This will keep going like this for some years and later someone will tell you that you should buy a house, which will help you in further tax saving and also build one of your assets.
If you have not destroyed your cash flow till, with credit cards, car loan and personal loan, you may like the idea and get into a new loan.
To pay for down payment of house you will look at your investments and withdraw some or all of them for your biggest expense which you may be calling as Investment.
And when things go out of hands, you will start blaming the economy, government, employer for all the wrong happenings in your life, as well as your financial situation.
Sounds Exaggerated? Well, I have seen many such real-life cases like this. In case you think you are different, then also If you look at your financial life holistically from the very beginning, you would be in a better position for sure.
It’s not about loan only, but your goals, your financial life, your taxes, your investments, your …all needs to be managed with a balanced and holistic approach.
So, you should start working on this structured financial planning approach before you ruin your financial life. Even if you think that you are prudent enough not to make such mistakes and smart enough to never fall prey to the mis sellers, it’s always wise to have a professional by your side to have a second opinion. And please note that advisor should not be Google 🙂
The Second-Best time to start with financial planning is NOW…as it’s never too late to correct your mistakes and get organized in your money matters.
You may have unrequired insurance policies or you may be underinsured, you may have stuck yourself in the wrong investment products which are not letting you grow financially, You may have some bad loans in your kitty, You may not be able to select suitable investments for your long and short term goals.
Sometimes you want to invest in high growth products, sometimes you want to stay safe, you need tax planning and want to know if there are some other options that may help you save taxes, you still have goals and different from the ones you have when you started earning
…and many more financial queries you seek answers too.
All this requires a well-structured Financial Planning approach. If you keep waiting, things will get worse, not better for sure.
Any time is the right time to do the right thing. Financial planning is a beautiful exercise which keeps your bad money behaviour in check and builds good behaviour, which turns into your habits. Success is in the process. So the choice is yours if you want to keep juggling around multiple priorities or take your life head-on and sort out different matters structurally and organize the complete life including financials.