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.
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.
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.
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.
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.
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.
Disclaimers:
IndiaFirst Life Insurance Company Limited, IRDAI Regn No.:143, CIN: U66010MH2008PLC183679, Address: 12th & 13th floor, North [C] Wing, Tower 4, Nesco IT Park, Nesco Center, Western Express Highway, Goregaon (East), Mumbai – 400 063. Toll-free No – 18002098700. Email Id:customer.first@indiafirstlife.com, Website: www.indiafirstlife.com, Fax No. +91226570600. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale. Trade logo displayed above belongs to our promoter M/s Bank of Baroda and is used by IndiaFirst Life Insurance Co. Ltd. under license. Advt. Ref. No
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