Those who are have a healthy income stream can afford to lose a percentage of their income and live comfortably still. Folks who have a limited income cannot afford to lose what they have. When you have limited resources, what you do with them is even more critical. Financial planning helps persons to structure their financial resources so that they get the most out of a limited income.

Financial planning helps people preserve and stretch the dollars that they earn and save. It does this by:

i) Protecting your savings and income

ii) Ensuring that the value of your savings is maintained

iii) Structuring and allocating your savings and income

iv) Allowing persons to set financial goals

The base of financial planning is protection of your assets and income. No matter what your income level is, you need to have a way to protect your assets; financial and otherwise. When you have limited income it is even more important to protect both your assets and your income. Those with lower earning power would simply take a much longer time to recover from debilitating illnesses, income loss or asset loss.

If you have a small workforce, you need to ensure that they are very productive. In a similar way, if your income is limited you must ensure that it's working optimally for you. It is even more important for lower income groups to try to achieve some growth on limited capital, since that growth is not going to arise primarily from additions. Portfolio diversification in financial planning is the method for ensuring that your income works best for you.

Imagine that you are on a deserted island, surviving on rations. You would surely have to think about how you're allocating your rations a lot more. Financial planning ensures that we think about and structure the distribution of our income and minimise our expenses. Budgeting is the primary means within the body of financial planning that facilitates this. It prevents wastage and ensures that we do what is necessary meet our stated goals.

The goal setting that is encouraged by financial planning helps us to maintain a long-term approach to our income and assets. With a limited income, it is easy to be swayed by living expenses and debt or to give up hope that you can accumulate a decent volume of wealth. Financial planning encourages financial goal-setting. It guarantees that even those with limited income can feel the power of financial goals and remain disciplined in pursuing them.

Sometimes, it may not be that your income is inherently limited, but that your debt servicing and living expenses seem to consume it. That is no reason to throw your hands up in despair. It is in situations of scarcity that planning and systematic approaches are most useful. With your finances, it is no different. Financial planning ensures that you take your limited (or abundant) financial resources and make the most out of it.

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