Financial planning is basically what and how an individual plans up his finances whether it is for the current living or far future. It can also be like specific goals which includes budget, savings, investments and much more. Everyone likes to have a peaceful financial life. And the only way one can attain good financial life is by having a good financial objective. One should include his short term, mid term and long term goals into the financial planning. Having a plan will make you focus more on your goals and easy to understand the path you are traveling on or need to travel on. 

Also read: How much expats know about their finances in UAE 

Steps involved in planning your finances:

  • Annual income- This is the first thing you need to note. What is your net worth? Make a note of the income you gain annually which will make you plan further easily.
  • Goals- What are your goals? Where do you want to see yourself in 20 years? Having a  goal is important and most of them fail in planning their future due to lack of goals. Understand what you want and it will make you understand your goal easily.
  • Money- Planning your finances actually starts with understanding how much capital is required. For this, you must note down the cash flow. Determine how much money you need in order to achieve those goals and how many years you want to reach your dreams.
  • Savings- Check how much you are saving each month. If not started yet then see how much you can save monthly/annually.
  • Investments- Money is the primary thing required to achieve any goal and one can get that by not just working all day but also by making some investments. There are various genuine investment firms in UAE. Investments are all about risk-taking. The more you invest the more risk you tend to take. But if you plan in a genuine firm then it would be less risk-taking. The more you try to invest the easier you can reach your goal. And experts suggest that one should invest at least 5% of his monthly income and make a profit out of it.

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Why is it necessary to plan your finances?

Your current plans determine your future totally. If one starts planning from his mid 20’s, there will be no financial stress after 30 years and can have a peaceful life after retirement. Planning your finances is very vital for everyone. One should have a clear picture of their cash flow.

One must ensure he has enough funds whenever required; This is the motto of the financial planning. This helps in making investments in fair projects and avoid unnecessary spendings. According to a study, only 30% of people are planning their finances and aims to increase their incoming cash flow. All the people who are financially successful will have financial planning done right. It is always preferable to have an eye on your expenses.

Most of them will get their financial plan done by taking a financial advisor’s help. And this is one of the best options, as the financial experts will have all knowledge and can direct you on a right path. Anything is fine until you get your planning done and is going right.

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Nikhita
Nikitha is a Senior Analyst at MyMoneySouq.com, she has been writing about personal finance, mortgage, and technology in the UAE for over two years. Her work has been featured by the GulfNews and other popular Financial Blogs in UAE. She is a part of a NGO called Immanuel. When not writing you can find her working with her organization, listening to music, trying different cuisines and watching her favorite shows.