| Those who are have a healthy income stream | | | | additions. Portfolio diversification in financial planning |
| can afford to lose a percentage of their income | | | | is the method for ensuring that your income |
| and live comfortably still. Folks who have a limited | | | | works best for you. |
| income cannot afford to lose what they have. | | | | Imagine that you are on a deserted island, |
| When you have limited resources, what you do | | | | surviving on rations. You would surely have to |
| with them is even more critical. Financial planning | | | | think about how you're allocating your rations a lot |
| helps persons to structure their financial resources | | | | more. Financial planning ensures that we think |
| so that they get the most out of a limited | | | | about and structure the distribution of our income |
| income. | | | | and minimise our expenses. Budgeting is the |
| Financial planning helps people preserve and | | | | primary means within the body of financial |
| stretch the dollars that they earn and save. It | | | | planning that facilitates this. It prevents wastage |
| does this by:i) Protecting your savings and | | | | and ensures that we do what is necessary meet |
| incomeii) Ensuring that the value of your savings is | | | | our stated goals. |
| maintainediii) Structuring and allocating your savings | | | | The goal setting that is encouraged by financial |
| and incomeiv) Allowing persons to set financial | | | | planning helps us to maintain a long-term approach |
| goals | | | | to our income and assets. With a limited income, it |
| The base of financial planning is protection of your | | | | is easy to be swayed by living expenses and debt |
| assets and income. No matter what your income | | | | or to give up hope that you can accumulate a |
| level is, you need to have a way to protect your | | | | decent volume of wealth. Financial planning |
| assets; financial and otherwise. When you have | | | | encourages financial goal-setting. It guarantees |
| limited income it is even more important to | | | | that even those with limited income can feel the |
| protect both your assets and your income. Those | | | | power of financial goals and remain disciplined in |
| with lower earning power would simply take a | | | | pursuing them. |
| much longer time to recover from debilitating | | | | Sometimes, it may not be that your income is |
| illnesses, income loss or asset loss. | | | | inherently limited, but that your debt servicing and |
| If you have a small workforce, you need to | | | | living expenses seem to consume it. That is no |
| ensure that they are very productive. In a similar | | | | reason to throw your hands up in despair. It is in |
| way, if your income is limited you must ensure | | | | situations of scarcity that planning and systematic |
| that it's working optimally for you. It is even more | | | | approaches are most useful. With your finances, it |
| important for lower income groups to try to | | | | is no different. Financial planning ensures that you |
| achieve some growth on limited capital, since that | | | | take your limited (or abundant) financial resources |
| growth is not going to arise primarily from | | | | and make the most out of it. |