Why is personal financial planning important

Financial planning

Many people realize too late the importance of personal Financial planning is. Relying on government regulations alone is not a good strategy. A financial requirement analysis not only serves to determine short, medium and long-term financial requirements, but should also include a result individual financial plan stand firm. The financial planning is Basis of allInvestment decisions of the investor. The plan is built up in stages so that in the end personal goals and wishes are financially feasible. Its list also helps the investor to achieve an optimal asset structure.

Draw up a financial plan

The foundation of any good financial planning is this Protection against risks that threaten the existence of the company about insurance and debt settlement.

  • The first stage includes the development of short-term liquidity, i.e. short-term available financial reserves. Both short term Funding is a reserve for emergencies, this should be around three months' salary. The short-term financial requirement also covers purchases made by the investor for up to one year.
  • Planning of personal finances looks like At the second step the funding of medium term Purchases before. The medium-term financial requirement reflects all planned acquisitions in the next four years. Short- and medium-term purchases are not investments that generate income, but rather consumables or consumer goods.
  • The third stage of the budget concerns the Securing old-age provision. This is about long-term financial needs, the due date of which is fixed when you retire. This goal is achieved with long-term savings contracts. The type of savings contract depends on the purpose of the old-age provision: to create capital to top up the pension or to purchase residential space that is used by the person and is not planned until later.
  • If the investor still has money at his disposal, he should in the fourth stage with the highest possible profitability in Investments invest.

Entrepreneurial financial planning

Sense and purpose of corporate financial planning is to secure the solvency of companies in order to Avoid bankruptcies and the ability to build or maintain investments. Similar to private households, a financial plan is drawn up that compares future expenditure and income, taking into account, among other things, the liquidity of companies.


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