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Whenever we read or think about financial planning or investing, we feel overwhelmed by the complexities of it. Some people feel I am good at earning but beyond that I don't know what to do with money. Where as some people mistake their ability or expertise to earn with expertise to plan and invest, forgetting that these are two different domains with different rules and requiring different acumen and behavior.

UNDERSTAND PRACTICAL THINGS

It is important to get sense of where you are going, what you want to be. Look at what financial freedom look like to you? Do your goals look like some burden to you? Creating a financial plan and following it with discipline enables you to channelize your energy towards your worthy goals and gives you immense peace of mind around money. An overestimate or lack of knowledge can get us into trouble with money and with rest of our lives as well. To become master in the money realm, we must first understand the practical things.

WHAT IS FINANCIAL PLANNING?

Financial planning provides support to your money life like centering provides to slab of house we are building. When we finish, the centering support can be withdrawn and we can use the slab freely.

People normally think that investing is financial planning. It is partially correct. Investing is a means to an end and financial planning begins with determining the end. It is necessary to know where we are headed i.e. the end, to decide the means that is process of savings and investing needed to reach there.

GOALS ARE IMPORTANT

Goals drive financial planning: Financial planning cannot begin without knowing goals. Goals connect our surfaces to our souls. They define what is important for us. They spell out our freedom in practical rupee terms. That dream of freedom gives direction to financial plan.

RESOURCES, EXTERNAL AND INTERNAL

The resources considered in financial planning include real estate, cash in hand, stocks, bonds, mutual funds, inheritance expected and your regular yearly income. They also contain internal resources like commitment, consistency, discipline and ability to earn and save. All the inner resources share one thing in common- they ask us to sacrifice something of the moment for a larger goal. Our capacity to save is our greatest resource around money. Once we understand goals and asses resources, we can implement an investment strategy. Three key and highly inter-related variables involved in developing a strategy are time, rate of return and risk.

OUR RELATIONSHIP TO RISK

In launching a financial planning process, it is important to understand our relationship to risk To translate resources into goals, we need to become very clear about how much risk we are willing to take and understand the degree of risk our investments contain. Virtually a mistakes in investing occur not because we choose the wrong investments but because we fa to understand our own volatile relationship with risk. If we can't understand or control our emotional response to risk, we will fail as investors and our goals will remain unfulfilled. Once we understand our willingness and capacity to take risk we can chart out a suitable path from our resources to our goals. Understand that margin for error or planning for the plan not goin as per plan is the most important part of the plan.

THE AHA FEELING

You need not wait till you achieve all your goals to experience peace of mind and freedom. The creation and execution of the plan itself gives you that experience the very moment you execute the plan. It is like when you plan a holiday to your favorite destination to experience freedom from your busy and routine life, you need not wait till you reach the destination to execute the bliss. You get that aha feeling the moment you start the journey to reach the destination by boarding the train or airplane or whatever the mode of transportation.

To sum up, financial planning concerns employing resources to reach your goals considering time, rate of return you need and risk you should take. It determines the discipline and control you must set for yourself. In short it protects process of wealth creation and your goals from your moods, thoughts and feelings by imparting a financial discipline.