What are the factors that Influence Financial Planning? (2024)

When you use the right financial planning strategy and follow it in the correct way, it will pay off.

Financial planning is a complete plan of your long-term and short-term goals for financial security. It involves multiple areas of finance such as taxes, savings, insurance, etc.

The complete assessment of financial planning relies upon future expectations and the present financial state.

Before we delve further, let’s know the fundamental principles of financial planning.

You must prepare your financial plan in a simple way. It must include your current finances and financial goals. It must also include strategies that you have set to attain those goals.

You must include various aspects of finance such as debt, cash flow, etc., for good financial planning.

You must use “Diversification” if you are planning for a long-term goal. This means you must invest your money in less and more risky investment products.

The less risky products may give you lower returns. But more risky products have a chance to give good returns. Both products ensure you that your money is safe.

There are numerous negative factors that can affect your financial planning. The factors are discussed below.

How do you manage your money? How do you segregate it into savings and investments? Savings are crucial. At the same time, good investment supports you to get wealth.

You can invest your money in FD, Shares, and other investment options. It will help you to achieve numerous financial planning landmarks. If you are still not focusing on savings and investments, you are making a big mistake.

Have a stable income? If yes, put effort into maintaining your financial planning.

You would be able to manage situations such as a rise in the inflation rate and everything becoming expensive. This is an external factor that influences your financial planning. You don’t have any control over it.

The current culture is evolving at a rapid pace. You have to put forward different ideas for fulfilling your goals. For example, if you plan to go for post-graduation, you cannot fully depend on your savings. You may have to get a mortgage from banks or private lenders. And to pay for it, you must have a fixed income.

Therefore, you need to add a clause while you verify your financial plan. This will aid you to get ready for facing any situation.

Many Global issues affect the Indian economy. For instance, fuel prices get high in India if oil prices rise globally. This drives inflation towards a higher level in a direct or indirect way.

Moreover, money flows in the form of investments between India and other countries. If international countries face problems, it can impact India’s investment in them or vice versa. It can also impact businesses by moving stocks up and down.