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Busting some myths about Financial Planning
Kavitha Menon kavitha@ppfas.com
While most of us would agree that a financial plan is a good thing, there are many mental blocks that prevent you from making one for self and family. These blocks are a result of many myths around financial planning. Let's deal with these myths to make the decision of making a plan easier.

Myth 1: Financial Planning is about investments - Life stage planning, insurance tax planning and estate planning are important building blocks of a good Financial Plan. Buying investments products is just one step of many.

Myth 2: Its expensive - Financial planning helps with a life time of money management. Although the initial costs for professional services looks high, amortize it over your life time and you will realize that these services are in fact cheap. I must add that there is no concept of free financial planning. If someone is offering you that, then you will pay with buying the wrong products. The costs of bad advise far exceeds the costs of hiring a professional planner while the benefits of good advise will help recover the costs very early. So if you find a good planner, don't hesitate paying a fee.

Myth 3: You need investments to start a FP - Today there are schemes that allow you to save as little as Rs. 500 a month. A demat account and broking account costs Rs. 500 for the whole year and you can buy single stocks of any value. A good financial plan will help you set realistic goals and plan your money matters for the future irrespective of your current financial situation.

Myth 4: I am too young for Estate planning. Besides it is meant for the rich - Making a good estate plan will help your family handle your affairs in the event of death or disability. If you have children it will also involve who will serve as their guardian if both parents die. It is needed for every one irrespective of the size of their wealth.

Myth 5: It's an instant solution - Financial Planning is no magical wand. Yes a financial plan can give you solutions. But these solutions are long term in nature and require certain discipline from you.

Myth 6: It's constraining in nature - Financial planning is about planning for your future so that you can enjoy your present. You don't need to give up comforts. Rather than being constraining; a good financial plan will help you lead a fulfilling life and have a great future. A good financial planner will help you prioritize your goals and help you create the much required balance between your today and tomorrow.

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