Why Should Professionals Have a Plan? shares Naresh Kumar of Wealocity
Naresh Kumar, co-founder, Wealocity
Most of the long-term saving tips rely on systematic and consistent investing strategies which are suitable for the salaried.When it comes to working professionals like that of actors, doctors, artists, etc. the income stream could be high but sporadic while most of the expenses are periodic like rent, groceries, salaries (to domestic help/driver, etc.), other up-keep and maintenance.Certainly, a higher degree of financial discipline is required for them to handle a seamless transaction and life.
It is hence a case for financial plan though the approach could veer from the conventual one.The irregular income shouldn’t deter them from pursuing a financial plan or an advisor to deal this.One major outcome of pursuing a financial plan is to gain knowledge about the future goals and how much would it cost. It articulates the numbers to the various dreams and aspirations.
While the general belief of professionals need not retire due to age is not being contested,the idea of relaxed and enjoyable life is pursuit of every individual and financial planning would abet in achieving it.Despite the nature of earnings or quantum of earnings there are certain aspects like that of risk, taxes, budgeting, etc. are customary. A financial plan addresses these concerns and helps out in bringing the solution.
For instance, a doctor would rely on diagnostic reports and his/her own observations to arrive at a right prescription. Similarly, an actor would understand the role/character, go through the script, practice/memorize it and then emote it.Likewise,a financial plan helps in identifying the cashflow (budgeting), possible areas which could be plugged (discretionary spends), saving habits (apportioning to needs,emergency), investing (creating wealth) and also consuming the corpus (distribution). So,how a professional would go through a methodic and diligent approach towards their job,a financial plan would also bring that attentiveness to their finances.
Get a grip: Having a financial plan helps them on how to expend, plan the future expenses in advance. This brings the comfort of control as it reduces the negative surprises.The intermittent inflows worsen the stability if not well planned and executed. A constant tab on the expenses is mandatory and a financial plan helps in collating the patterns.
In driver’s seat: Once the finances are in good shape, they could concentrate better at their job. Not having to be worried about tomorrow only enhances their creativity (actors/artists) and use the financial plan to approach the work with reverse calculation i.e. plan earnings matching the goal needs.One of my clients who was a consultant revised his fees per session once he realized the investment requirement.
Let the money work for you: Being a professional, keeps one completely occupied and busy. It is very difficult to track and maintain how the earnings are deployed profitably. A financial plan assists in earmarking each of the investments,letting them hold for considerable amount of time so that the best of results is achieved. Also, by mapping to the goals, a purpose is clearly attached to each of the investment making the entire experience fruitful.
Retire not re-tire: Retirement doesn’t always mean that one has to shut all work and sit at home.As a professional one could continue to pursue their passion but is done for the fun and not for earning.Ensuring optionality through wealth accumulation should be a goal professionals could explore. Also, if one were to get involved in philanthropy or even safeguarding and transferring the estate to the next generation, a comprehensive financial plan is the starting point.
Where’s your financial doctor: Even doctors don’t recommend self-medication. There is only to a point one could stretch on the DIY (Do It Yourself) method. Not because investing is very complex or skillful but because most of us lack the desired temperament or time. A financial advisor would be a neutral person who would come handy when making decisions. He/she could act as a speed breaker in your train of thoughts that could avoid the pitfalls of emotional decisions. He/she would be beneficial in creating a plan, track and review in accordance with the defined goals.
Views are personal: Naresh Kumar from Hyderabad is a co-founder of “Wealocity” a wealth management firm
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