Why financial planning is necessary and important? Essay

People tend to shy away from learning personal finance, finding reasons to avoid learning it. However, I think personal finance is relatively important and it is has a great impact on our everyday life. To me, personal finance is defined as how well one manages his or her money. It is important to realise that how money is affecting out life. Money is not everything, but without money we can't survive. There are reasons why personal finance is important to me.
First and foremast, personal finance is important because it can help me to develop a good financial planning. A good financial planning helps me to earn more. It also enables me to achieve my financial goals, such as buying an Audi after I graduate and travelling, if I can manage my financial properly. From learning personal finance, I realised that the best protection is knowledge. Seeking advice from a professional financial advisor is not necessarily good. I do not need to rely on others to decide my financial decisions after learning it.
Second, I can manage my money well by learning personal finance. If I understand personal finance, I will know the inflow and outflow of my money better. I can have the bigger chance for avoiding myself to get a negative cash flow (money flow in - money flow out) as I learn how to set my budget and follow the budget.
Once I have positive cash flow, I can use the money to do some investments. Next, personal finance is important because it gives me an opportunity me to manage my investment. By learning it, I can gain knowledge on how to invest. I am able to choose the right types of investments which fit my needs. For example, I can learn how to diversify my portfolio investment by reducing the risk without affecting the required return. I will have the ability to invest smartly and take benefits of changes in economy and interest rates.
I can also protect my health and wealth with insurance by learning personal finance. We have to be flexible and alert enough to the unexpected events. Therefore, insurance is a necessity. I can determine my own insurance needs and design a suitable insurance plan for myself. There are many different policies in each kind of insurance. Through personal finance, I am able to make the right choice of insurance that fits me the most. The most tragic in life is that one doesn't have the enough amount of insurance to cover a happened unexpected event, for instance a fatal accident. Insurance prevents me from financial downfall.
Last but not least, all the knowledge from personal finance is important because it can lead me to financial success. I can achieve success by using the knowledge and information from personal finance to deal with the economic environment. The skills learnt include being informed with the condition of economy and predicting future directions of economy. In short, victory in personal finance leads me to a better life.