Sunday, February 24, 2013

Financial planning is as important as family planning

This post is specially to all my newly married friends. You should recite this every morning and night - "I will give financial planning equal importance if not more than family planning"

A financial plan like any other plan is prepared to make the path to meet his/her goals clear. Goals can be short term, medium term and long term, also their priority may vary. At the very onset of a financial planning one needs to make a list of all the goal that s/he wants to achieve in their lifetime. Since it is not possible to achieve each one of them at one go, they need to be defined on the basis of their priority. Also important for preparing an apt financial plan one needs to understand the various financial product available to him/her, their features like tenure of investment, risk, liquidity, returns, etc.

Now that you have done your home-work on financial products that caters your different needs, you can start with the financial plan preparation. The first step is to ensure that you have enough money to meet next 3-6 months expenses this helps in meeting any unforeseen expenses like medical expenses. One can open a saving a/c with linked fixed deposit thus earning interest higher than saving a/c on amount transferred to FD a/c and liquidity on the complete amount deposited. Once you have made adequate provision for such unforeseen expenses, basis your monthly household saving amount you need to bifurcate the savings into various short-term and long-term goals on the basis of their priority. Keep in mind that for any short-term goal always look for product with high liquidity and fixed return. This may change as the duration of the goal increase.

Tax planning is an integral part of your financial planning as every single rupee you save on tax forms part of your household saving. I have seen many friends running after tax-experts or calling up friends or scanning through various portals on internet to understand what all options they have to save maximum tax. Though they are within deadline to complete the formalities, the only problem is since they did not do it periodically from day 1 now they may not have enough cash in hand to deal with all the investments requirement.

Friends, I am no expert but can help you in making your financial plan or you can opt for an expert financial planner (choose one with cautious) but start with a clear path as far as investments are concerned. I am open to answer all your queries to the best of my ability via phone, email or any other means you find appropriate to contact me. 

No comments:

Post a Comment