Many people do not realize the importance of financial planning. The reason is simply nobody tells them the importance of it. Let's look at the reality, did your teacher in school teach you how to invest? Did your professor in university teach you how to buy insurance? How about your parents? Perhaps yes? How about your colleagues at work? Even if they do, do they really give you the right information about financial planning?
Let me share with the 3 major things why financial planning is important.
- Inflation. At 4% inflation, $ 100 k today will be worth only $ 67 K in 10 years. Do you aware that the percentage of your yearly income increment has to be factored in the inflation rate?
- Retirement. At the age of 55, the average man is expected to have 14 years of retired life and the average woman is expected to have 19 years. Do you have enough money to support yourself for that length of time after your retirement?
- Education Cost. If you have kids, the education cost of $ 100 k will cost $280 k in 18 years. Do you realize that college cost is increasing faster then the inflation?
Financial planning is important because it is a basic defending tool against these 3 major unrealized future financial issues.