Why is Financial Planning & Savings important in business and (every-day life)?

When you run a company, there are challenges every day and sometimes you laugh at instances when things do not go your way. In the last several months, I have finally begun to realize savings & financial planning are critical in running a business (or for that matter in our every-day life).

savings

Difficult to borrow when there is a dire need: When there is a need for you to borrow, everyone will be cash tight (they may/will really be cash tight). 1 out of 10 people you talk to may have liquid cash in hand. You may have to hit a 100 people to find 10 prospective lenders and 1 on 10 maybe willing to lend you money. It is a process.

Family Concerns: Family takes a priority over everything. Having to borrow also takes a toll with your family. You would have your immediate family members lecture you on financial planning (‘I have been telling you all this while to plan’. (This is certainly a genuine concern and they are right.)

Firefighting: It is always easy to plan/ save when things are going well. You never know what is in store (good/bad) and when things do not go as planned, you end up fire-fighting the problem. You also lose time to execute on your immediate needs or plan for the future. It will take a while for you to get back on track.

Lose out on opportunities: You may have to lose out on good opportunities and also time which could have been effectively utilized and spent.

Interest Rates: This depends on where you borrow and who your lender is/what equity you provide for the loan. This adds to your monthly burden and is a cost which needs to be accounted for.

If there is cash in hand/your finances are strong, you always are in a better boat. Things are in control. Everything is within reach. You could leverage your financial position, have the luxury of time, plan and execute better. Begin saving & planning today – March 31, 2014.

P:S: I am no expert in financial planning/savings. Intend & have begun to work towards it.

Post a Comment

Further reading

Girls Going To Work

A vast majority of women want to work and they do not want to sit idle at home. Sheryl Sandberg in her book Lean In says that men and women working...

Karthik Chidambaram