Financial planning entails goals setting on how available cash will be used. Having a financial plan is essential as it will guide me in using cash in a planned way and avoid wastage. The plan will be necessary for identifying the activities which should be prioritized, for instance, paying for the necessities and avoiding wastage on luxuries.
The process of financial planning can be cumbersome, long and tiring. It requires identifying all the financial needs that exist and establishing which are more essential than others. It also requires sacrificing some of the financial needs, depending on the amount of money available. It is hard to decide which financial needs have to be sacrificed.
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Creating a personal financial plan is essential as it helps avoid wastage of money. The plan helps in creating short-term and long-term goals and establishing how a balance will be made to ensure that all the goals are achieved. The plan can also help determine any possible ways in which diversification can be achieved to improve the source of finance.
I budget because it helps me control and plan for the money I have in disposal. The budget assists in allocating a specific amount of money on different needs. The budget guides me in using only the money I have to avoid accumulating debts because of overspending. A budget also helps determine the source of my income and whether I will have a regular flow all through.
Financial planning can be useful in my college life. My parents will be giving a certain amount of money to spend for one month. To avoid misusing the money and staying without an allowance before the month ends, I will be planning on how to spend the cash. I will prioritize all the essential needs before luxuries.
