New Delhi: Most of us are so busy earning and spending that we keep postponing financial planning for the future. We think that we are so young that we don’t need to worry about retirement or emergency funds. But this thinking can cause huge losses in the future. Lack of financial security not only affects the future, but many times one may have to face difficulties in the present as well. Let us know why proper financial planning is necessary and what can be the disadvantages of ignoring it.
Money problems during emergencies
Life is full of uncertainties. A medical emergency, a job loss, or a sudden big expense can occur at any time.If you have not already saved, you may have to take a loan, exhaust your savings or depend on others. Create an emergency fund, which should have money equivalent to at least 6-12 months of expenses. Keep it in a bank savings account, fixed deposit, or liquid funds so that it can be withdrawn immediately when needed. Give priority to saving before spending, so that you remain self-reliant even in financial crisis.
Late retirement planning
Many of us think that we will worry about retirement later. But if it is not started on time, it can be very difficult later. Suppose if you invest ₹10,000 every month at the age of 25 and get 12% annual return, then you can accumulate more than ₹10 crore by the age of 60. But if you start investing at the age of 40, then to get the same amount, you will have to invest ₹1 lakh every month.