Managing money is perhaps as important as having it. After all, earning and not putting that money to the best use defeats the very purpose of earning. This is where financial planning comes into play. It helps you through several stages of life as well as during the challenges that life throws at you. Needless to say, financial planning is an essential step that we must take as we start earning.
"As long as there is money, there needs to be planning," says D Muthukrishnan, a Chennai-based certified financial planner.
But is there an ideal age to start financial planning?
Experts say it's best to start it as soon as you begin to earn and make changes to the plan as per requirements as you move ahead in life.
"Financial planning should start as soon as earning starts. Once someone starts earning income, he should go for financial planning. Basic hygiene factors like emergency fund, term cover and health insurance should be the beginning of the plan," said Muthukrishnan.
He added that as career progresses and situation changes from being single to having a family, the planning becomes more detailed and goes on well into retirement and beyond.
Aditya Shah, Founder, JST Investments, also states that the ideal time to start financial planning is as soon as one starts to earn and save.
"The time you should start financial planning is once you start earning, regardless of age or income. As financial planning entails planning right from insurance to end asset allocation, starting early is important. In the early years it is very easy to get insurance and therefore imperative to start then," said Shah.
Deepali Sen, Founder Partner, Srujan Financial Services LLP (a Mutual Fund Distributor), however, says the ideal age can differ from person to person depending on their situation. It should begin from the time the client has some spare money to invest (either earned or received as a pocket money), Sen suggests.
"The first step to do after having some surplus is to start investing that money for future goals. This should be done after some money is kept aside for emergencies. The goals then need to be bucketed as short (up to 2 years), medium (2 to 7 years) or long (in excess of 7 years)," she advises.
The earlier you start saving and investing, the more time your money has to grow, says Viral Bhatt, Founder, Money Mantra, adding that even if you can only save a small amount each month, it will add up over time. Plus, starting early can help you develop good financial habits that will benefit you throughout your life.
Bhatt lists some of the benefits of starting financial planning early as follows:
More time for your money to grow: As mentioned above, the earlier you start saving and investing, the more time your money has to grow due to compound interest.
More flexibility: When you start financial planning early, you have more flexibility to make changes to your plan as needed. For example, if you decide to have children or start a new business, you can adjust your plan accordingly.
Less stress: Having a financial plan in place can give you peace of mind knowing that you are on track to reach your financial goals. This can reduce stress and anxiety about the future.