Financial planning is an umbrella term that comprises of diverse aspects of the financials of a person. A lot of people tend to confuse financial planning to simply be an exercise to sort out the spending habits of a person and improve their saving propensity. While that is true, financial planning also serves a much larger purpose. カヴァン・ チョクシ underlines that smart financial planning would take a person closer to financial freedom. Kavan is a successful investor, business management consultant and wealth advisor.

カヴァン・ チョクシ points out three of the prime pillars of financial planning

Hard work, luck, and talent might be important factors in achieving financial success, however, financial freedom is achieved through strategic management, effort, and planning. The ones who achieve financial freedom are able to do so by creating a proper roadmap for the journey and sticking by it. Developing a financial plan would be an individualized, complex task, but the components used to create it are very straightforward. Here are three of the major ones:

• The First Pillar—Investments:  Wealth implies to an abundance of money or possessions. It is achieved by living within the means one has and saving money. The period in which a person accumulates wealth is considered to be the accumulation phase of their financial plan. The period when they start withdrawing money from assets in the form of living expenses and “income” is known to be the distribution phase. Investing is simply the process of making the wealth one has accumulated over the years to work, so that they can achieve financial freedom. Where a person decides to put their money is generally the most important consideration in achieving financial freedom. After all, wealth is not generally determined by a single investment. In fact, it is more about how assets are allocated.
• The Second Pillar—Income Planning: This is the process of developing a detailed strategy meant for determining how much income one would require to live the retirement lifestyle they desire. For some, this may mean making provision for travel, while for others, it can imply to reducing expenses.  Income planning largely involves looking at plans for the future and deciding how to implement them, much like the development and implementation of a cash flow plan or a budget. Just following a simple three-step plan can go a long way in creating a retirement income plan that will last throughout a lifetime.
• The Third Pillar—Insurance: Insurance is crucial to risk management. By choosing to transfer the risk of potential loss to someone else, insurance plans allow the policyholder to protect themselves against potential loss and financial hardship in a cost-effective manner. It is a huge step in financial planning. Everyone benefits from insurance by allowing risk to be spread among a large group of people.

カヴァン・ チョクシ mentions that the three pillars discussed above are vital to building the foundation of any financial plan. No matter whether one is just starting their journey towards financial freedom or is halfway there, developing a conscious strategy of managing opportunities is important to achieving the goal.