If you’ve ever wondered, ‘Why is financial planning important?’ You’re not alone. Financial planning is the act of managing your money to ensure you’re effectively handling your financial situation. It’s important as it helps you keep track of your spending and ensures you have a backup plan if anything unplanned happens.Â
In this blog, we will look at why financial planning is important and how the team at Inovayt can help you manage your money.Â
What is financial planning, and why is financial planning important?
Financial planning is the broad term used when talking about money management. From personal to business, financial advisors work with their clients to assess their financial situation and create a plan for their financial future. Financial planning is crucial as it allows you to understand where your money is coming in from and where it’s going so you can adjust accordingly to achieve your financial goals. It’s a vital part of life - regardless of what stage you’re at in your financial journey. From young to mid-life up to retirement, an Inovayt financial advisor is here to help create a plan tailored to your financial situation and goals. Want to learn more? Read our blog, ‘What is Financial Planning?’Benefits of financial planning
There are plenty of benefits that occur as a result of financial planning. Some of the benefits of working with an Inovayt financial planner include:Â- Financial security and peace of mind.
- Improved financial decision-making.
- Achieving short-term and long-term goals for you or your business.
- Preparing for emergencies and unexpected expenses.
- Tailored advice to your financial situation.
- Regular financial reviews to keep you on track.
- Growing your wealth for retirement.
- They create set-and-forget investment strategies.
Key components of financial planning
Financial planning is often broken into a couple of main components. These are as follows:Budgeting
There is more to budgeting with a financial planner than entering your expenses into a spreadsheet. A budget is a process we take our clients through to understand their household income and expenditure and determine their cash flow. A tailored budget will highlight any negative spending patterns and can be adjusted to suit the financial goals that you’re trying to achieve. It allows us to track your expenses and identify any areas where you could be saving. Curious about your incomings and outgoings? Use our free budget planner calculator today.ÂSavings and investments
Savings and investments look different for everyone. While some prefer to keep their savings in high-interest bank accounts, others might choose to invest in real estate or the stock market. An Inovayt financial planner can assist with the following:Â- Ways of saving for the future.
- Different types of investments (e.g., stocks, bonds, real estate).
- Diversification and risk management of investments.
Debt management
While debt can feel crushing and even isolating for some, it’s one of the most common things our team helps people with. Working with an Invoayt financial planner will give you strategies for managing and reducing debt while simultaneously building upon your savings. They can also assist you with the impact of interest rates on your debt.Retirement planning
Retirement planning is another thing we see a lot of our clients for. We have team members who specialise in retirement financial planning and assist our clients in:Â- Setting retirement goals
- Maximising their superannuation
- Calculating their retirement needs
The role of financial advisors
It’s a common misconception that financial advisors and financial planning are reserved for the wealthy older generation, but this isn’t the case. A financial advisor is an incredibly beneficial person to have on board for support - regardless of where you’re at in your financial journey. At Inovayt, our team of expert financial advisors can help with:Â- Superannuation and investment advice
- Risk insurance
- Cash Flow planning and budgeting
- Structuring
- Tax planning
- Retirement planning