Financial planning helps you to evaluate your current financial position, estimate the cost of future financial goals and establish strategies to meet them.
Without a suitable plan, you may run certain risks such as having insufficient funds to meet big future expenses like education costs, down payment for a home or meetin gretirement expenses.
A successful financial plan will help you to :
- Beat inflation - for money to grow in terms of purchasing power, it has to grow faster than national inflation.
- Minimise taxes - a dollar less to the taxman means a dollar more in your pocket. Taxes can be minimised by fully utilising your deductions and reliefs and other similar strategies.
- Manage the unexpected - an emergency fund on top of adequate health and life insurance is essential as a hedge against unexpected events like illnesses or unexpected expenses.
- Meet your goals - paying for things like your children's university expenses, special hobbies and travel is a result of proper planning.
- Meet your retirement expenses - financial planning enables you to maintain your lifestyle during your retirement. Starting a savings program as a supplement to your CPF savings might be necessary to achieve this.
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