Life presents so many wonderful opportunities, it would be a waste to let them slip away just because you don’t have money. Your dreams, goals, the aspirations of your family, each of these motivates you to work harder and save more. Yet, often, there is still not enough in the bank.
Here’s the good news! Financial planning can make your money work hard for you, rather than vice versa. Think of it as a GPS for your money – it shows you where you are, where you want to go, and how to get there. It maps your current and future income and expenses, net worth, cash flow, savings, investments, and even risks. This information is then evaluated to outline suitable investment strategies to achieve your goals.
How to do financial planning
Financial planning isn’t a one size fits all or one-time event. It is a lifelong process that evolves with your changing needs and if done with diligence and discipline, can help you tick every item off your wish list.
Here are a few tips to get started:
1) Calculate expenses vs. income
Your monthly income, fixed expenses and the leftover money is the holy trinity of savings. Determining these will help you plan a budget, which is important to stick to if you want to stay out of debt and achieve long term goals. Create a minimum monthly saving threshold and remember to factor in inflation.
2) Create an investment portfolio
All surplus cash must be invested. The earlier you start, the better as your corpus must have a good number of years to grow. Remember to monitor your portfolio regularly.
3) Smart tax planning
Invest in tax-saving instruments and keep track of all tax exemptions and rebates.
4) Insurance is important
Insurance plans like ULIP give you the double benefit of financial security for your family as well as wealth creation.
5) Emergency Fund
Setting aside an untouchable amount for emergencies will keep you prepared for life’s uncertainties.
Types of financial plans
There are different types of financial planning for every life stage, which can be customised to your requirements.
1) Personal Financial Plan
This kind of financial plan measures how much you spend against how much you earn, to create a monthly budget for necessities and savings and investments. It tracks all your relationships with money, i.e., saving, investing, budgeting, credit card spends, ATM withdrawals, insurance, debts, tax, and vacations. This will help you reduce expenditure, increase savings, and grow wealth.
2) Retirement Financial Plan
The retirement planning process isn’t much different from personal financial planning, but keep in mind that the absence of a regular income and impending health risks need more attention. To enjoy retirement to the max, start planning for it as early as possible by factoring it into your personal plan.
The IndiaFirst Life Guaranteed Pension Plan is one of the best pension plans in India as it guarantees an income for you as long as you live, with growing returns that beat inflation, and options that offer additional benefits and value.
3) Estate Financial Plan
In simple terms, this type of financial plan concerns how you want your movable and immovable assets distributed after you pass away. These assets include houses, cars, stocks, jewellery, artwork, life insurance, pensions, and debts. The best estate plan is to seek legal advice and execute a will. Estate planning is essential for everyone, not just for the wealthy, to ensure that your assets land up in the right hands.
4) Investment Financial Plan
More than just save money, you want it to grow beyond your expectations so that you can fulfill all your goals at various stages of your life. Investment plans offer different types of financial planning strategies for each stage – your marriage, purchasing a house, children’s higher education, parents’ medical expenses, your retirement, and so on. These strategies help you make smart money moves that cover your expenses, understand risks, and thereby, buffer you from market volatility.
The IndiaFirst Life Radiance Smart Invest Plan ranks high on flexibility, growth potential, and financial protection as it offers multiple coverages, fund options and prudent savings strategies that meet your financial and personal goals.
5) Tax Financial Plan
Everybody wants to reduce their tax liabilities and this kind of financial plan gives you a smart edge through investments that leverage tax rebates, exemptions, and benefits. Saving tax leaves you with more money to invest and grow your wealth. You can benefit from a wide range of deductions in Sections 80C through 80U of the Income Tax Act, 1961, as well as deductions and tax credits are listed under the Income Tax Act, 1961. Provident Public Fund (PPF), Equity Linked Saving Schemes (ELSS) in mutual funds, National Saving Certificates (NSC) or 5-year bank deposits, life insurance, health insurance premium and home loan payments are some instruments to help you save tax.
Term insurance plans are good tax-saving investments that also help you protect your loved ones and maintain their standard of living, even in unforeseen circumstances.
IndiaFirst Life Guaranteed Protection Plus Plan is a zero compromise, win-win plan that offers multiple coverage options, return of premium option, spouse cover, in addition to waiver of premium for 40 critical illness.
IndiaFirst Life Plan offers comprehensive financial protection to your family members at an affordable price.
For financial advice on any of the above mentioned plans, it is best to consult an expert as they can give you a customised strategy after studying your financial health. They can ensure that you save more than you earn and provide the right investments to cushion you against future risks. Having a financial plan isn't just about numbers; it is about peace of mind knowing that your current and future needs are taken care of.
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