A Quick Guide To The Basics Of Financial Planning In India

IndiaFirst Life
• 10 Feb, 2025

Basics Of Financial Planning In India

Financial planning is a comprehensive process that helps individuals manage their finances to achieve personal economic satisfaction. It involves setting financial goals, creating a plan to achieve them, and regularly reviewing and adjusting the plan as necessary.

Let’s look at the fundamentals of financial planning that can help you in your journey.

Setting Financial Goals

The first step in financial planning is to identify your financial goals. They can be short-term, medium-term, or long-term. Clearly defined goals can provide direction and purpose for your financial planning efforts.

Budgeting

Creating a budget is crucial for financial planning. It can help you track your income and expenses, ensuring you live within your means and can allocate funds towards your financial goals. Start by calculating your total income and total expenses for the week, month, and year. You can then set aside some spending money and earmark what you want to save and invest.

Saving and Investing

They are essential components of financial planning. Saving ensures you have funds for emergencies and short-term goals, while investing helps grow your wealth over time. Investments can take various forms. Besides traditional investments such as gold or real estate, it is important to consider options such as mutual funds and investment schemes. Moreover, do consider schemes providing security for the future, such as life insurance plans.

Tax Planning

Effective tax planning can help you save money and reduce your tax liability. Understand the various tax-saving instruments available in India under the old tax regime and see how they can be integrated into your financial planning.

Retirement Planning

It is about ensuring you have enough funds to maintain your lifestyle after retirement. Explore various retirement plans in India and start planning early to benefit from the power of compounding.

If you are starting with your financial planning journey, it could be a tad overwhelming. To make this easier, you could use online calculators. For example, you can use a life insurance calculator to understand what you can put into the plan to get the returns you expect. To get an idea of how your investments can help you earn tax exemptions, you can use an income tax calculator.

Financial planning is not a one-time activity. Regularly review your financial plan to ensure it remains aligned with your goals and modify it as necessary.

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Headquartered in Mumbai, IndiaFirst Life Insurance Company Limited (IndiaFirst Life), with a paid-up share capital of INR 754.37 crore, is one of the fastest growing private life insurers in India in terms of New Business IRP in Fiscal 2023. Our key differentiators are our simple, easy-to-understand products that are optimally priced. As of Sept 30, 2023, we offered 30 retail products, 13 group products along with six riders (across retail and group portfolios), along with policies under the PMJJBY scheme, catering to protection, savings, health and retirement needs of our customers, leveraging multiple distribution capabilities and augmenting various investment options. In all propositions under the categories of Participating Plans, Non-Participating Savings Plans, Non-Participating Protection Plans, Unit Linked Insurance Plans, Group Protection Plans, Corporate Funds Plans, Riders & PMJJBY form a complete suite of offerings that help our customers prepare for the certainties of life. Our products are easy to understand and optimally priced with a developed comprehensive risk management framework/policy.

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