Financial planning is very important. We cannot keep spending all the money we earn and dream to have a beautiful life in the future. Some countries don't believe in the concept of savings and they spend the money then and there. But we have to have some financial discipline to be able to cover the expenses of both us as well as the family. If we have kids our financial needs are also unpredictable.
All the plans should happen only with the money we hold in hand right now. The planning shouldn't happen with the money we would be getting tomorrow after we fulfill our dreams. As humans, we might have a lot of dreams but it is hard to keep up with everything we have in life and chase those dreams. So it is good to plan life only with the current situation of life and not based on what we would be getting in the future.
Saving the money we earn
I'm a lucky person to have parents who thought me the art of saving money. This came to me from a very young age and has helped me a lot. Whenever I make any big expense, I first make sure I save enough money for that and then make that expense. I don't play around with the money I don't have yet in hand and I don't even take loans often.
Saving money is very important to go towards our dreams. People who would like to become rich should know the art of making money but they should also know the art of saving the money they make. People might earn several thousand a day but what is the point if they spend several thousand every day?
Emergency funds
Keeping some emergency funds aside is good for financial planning. This should also happen with the money we currently have in hand. Maybe when we have tomorrow's cash, we can do some toppings on the current emergency funds and have a decent amount there but even if the earning is very low right now, a plan should be made and with today's cash, there should be a proper saving for emergency funds.
Proper planned investments
We can prepare our tomorrow with proper investments too on the right things. Expenses can be reconsidered and can be used on proper assets and that should also be made only with today's money. With tomorrow's money, if we are planning to do any investment, it becomes a liability and not an investment for us. We have to plan the investments well and execute them efficiently so that not just us but even our family is benefited from them.
Passive income generation from multiple sources
Passive income generation alone is not sufficient and that's why I added the second part saying we need it from multiple sources. Having income generated from only a single source whether it is active or passive is not always good. In order to keep our future safe, we have to try and develop multiple income-generating streams and some of those streams should always be passive income sources.
For all the money we are generating, we should also consider the fact that there would be taxes so we have to earn enough so that we have enough even after we pay the taxes to the government.
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