Basic Financial Planning
What is the most essential for you?
Answer this question and you'll know what your basic financial
planning needs to cover.
As you saw in financial planning activities an in the financial planning pyramid, there are various aspects that
you need to consider in your financial planning. If it
seems that this implies too much work and effort, perhaps you
may not wish to go all the way. But, what is the least
that a person should do?
It's not easy to provide a general answer to this question
because the answer depends on your personal objectives
and situation. For example, if your long term goal is
to achieve financial security, it may be that you do not need
an investment plan which involves financial derivatives (options,
futures, etc.). But if you want to achieve financial
freedom and wish to use these investment vehicles, then your
planning needs to take them into account.
In a few words: what basic financial planning means for
you doesn't apply to everyone.
Another way of analyzing the basics which you need to plan is
to identify the basic or probable events which could affect you,
- It is unavoidable that some day you're going to die,
- It is unavoidable that you'll get older,
- It is unavoidable that you need clothing, shelter, food,
education and for this you need a sure source of income (not a
secure job since that doesn't exist)
- It is almost unavoidable that you'll have health problems,
- Etc. etc.
Therefore, if you know all that could happen beforehand, what
should your basic plans be?