Check-List of Financial Planning

What is Financial Planning?

Financial Planning is a process that Reviews your current financial position, sets goals for the future and creates a plan to achieve those goals

Reviewing your Finances

You should begin with a review of your current financial position. Start with a top down approach.Do the following to ascertain your position

  • Total assets + Total savings – Total debt = Your position
  • Work it down further by doing a cash flow analysis
  • Monthly income – Monthly expenses = Your cash flow
  • Further analyse your expenditure in more detail
  • Where are you spending money?
  • Clothing, entertainment, eating out
  • Identify opportunities to save money
  • Eg: eating out lesser could save you Rs 1000 per month

Setting Goals

  • Identify your goals
  • Buying a new car, buying a house, taking a vacation, educating your children etc
  • Understand the trade offs
  • Lesser money in the short term for clothing, entertainment etc
  • Set clear targets and time frames to achieve your goals
  • Saving Rs 2000 per month will help educate your children
  • Saving Rs 1000 per month will help fund your vacation

Creating A Financial Plan

  • Include a mix of short and long term goals
  • Convert your goals into rupee amount and set a deadline to achieve them
  • Diversify your investments according to your risk profile
  • Look for ways to minimize tax
  • Don’t forget insurance
  • Start retirement planning
  • Get professional advise in required
  • Don’t wait, implement your plan today

Review your plan

Life is always changing, so it is important to review your plan if any of the following

  • Your circumstances change
  • Through marriage, new dependants etc
  • Your rules change
  • Through taxation etc
  • Investment climate changes
  • Through market boom and busts

Tips To Stay On Track

  • Stay focused on your lifestyle goals
  • Don’t be distracted by fear or greed
  • Diversify your investments according to your risk profile
  • Keep a long term view
  • Review your plan regularly
  • Get advise from a professional