8 Fool-proof steps for building a Financial Plan for Yourself
Kudos to you, if you’re working on building healthier habits so that you can live a life with fewer lifestyle diseases & problems. However, life happens; & it never puts its foot down when it comes to giving us surprises! Isn’t it? Medical emergencies, layoffs, education expenditure etc. are events that we seldom adequately prepare ourselves for. And that brings us to discussing financial planning across the different phases & volatile situations that are usually unavoidable. That’s where a good financial plan can save you from an impending tremor in your life savings.
The essence of a well-rounded financial planning cannot be understated. After all, a structured map is the key to proper growth. Also, proper financial planning helps you prioritize key tasks & keep a tab on your progress while improving your financial literacy too.
To be brutally frank about how money works today, we have come far enough from days when our parents used to secure their life savings by investing in some Fixed Deposits (FDs), a few Recurring Deposits (RDs), postal savings & maybe, a rather generic life insurance policy.
With a savage inflation rate hovering over our current way of living, it is practically impossible to deal with any financial emergency that knocks your door anytime, let alone aiming to become rich.
What to consider in Financial Planning?
Sketching a Financial Plan for yourself
When it comes to money matters, We often ignore the importance of financial planning when we are single. But it is essential to do so, as proper planning will help you to meet your immediate and long-term goals. But, in case your relationship status changes, your preliminary plans can assist make a new plan for both. However, a financial plan is equally essential for both men & women, but a few believe it is more important for the latter due to a subtly evident gender wage gap.
Developing a Financial Plan if You’re Getting Married
There is a massive difference between financial planning for an individual & for someone who is going to get married or start a family. If you’re getting married, you need to plan your finances as a team & create a robust roadmap with your key financial goals in mind. Plus, this is also the perfect time to consider getting a Family health insurance plan. Such a policy covers both you & your spouse, and premiums which are affordable besides availing multiple perks.
How to make a Financial Plan?
1. Assess & List your financial goals
You’re half sorted if you know your financial goals at least for the coming few years.
So, before you start your financial planning, make sure to pay all your debts. Particularly the high interest debts first. This will let you make a fresh start without the baggage of paying previous credits to an individual or financial institution. Besides, paying debts early will give you full control over your credit score & will also drain less money from your savings & investments.
2. Chalking An Investment Plan
For serious investments, have a proper plan about them. This will include your long-term & short-term goals. However, research well about a genre; before putting in any money into it; whether it fits your investment goals & objectives. Remember that investment is a long-term goal, & it also test your patience in order to see your money grow with time.
3. Allocate your Assets
It’s critically dangerous to invest all your savings into one type of investment. That’s because the Return on Investment (ROI) is different for different types of assets. Always make sure that you divide your investments cleverly in equity, immovable assets, gold & debt. This is the crux of a solid financial plan.
4. Planning for Retirement
To keep thriving at your older age, have an investment plan for retirement as well. After all, living life on your own terms independently even after you stop working, is priceless. Ain’t it? But, prior to it, you got to calculate the approximate monetary goals, inflation rate & other tangible factors. Also, if you haven’t started planning your retirement yet, know that it is never too late to start an investment plan for retirement.
5. Plan for Taxes
No matter what you are planning for, whether it is an investment plan or a retirement plan, a significant amount is going to be deducted on taxes. So, while making an investment or planning, make sure to take taxes into account and invest in tax saving investments to boost your investment by reducing tax deductions.
6. Get a Car Insurance Plan
It is particularly beneficial to have a car insurance plan if you own a car. This will help protect your vehicle from unnecessary monetary losses during any accidental damage. This, in turn, means that you have more money, as you are not required to exploit either of your savings or the emergency funds.
7. Start an Emergency Fund
Apart from investing money, it is also essential to save some to deal with emergencies. For example, sudden emergencies might include medical or property needs & others. It is safe to avoid exploiting the investment money or savings in this case. Hence, to tackle such emergencies, start an emergency fund beforehand.
8. Keep Reviewing your Financial Plan Frequently
Creating a goal & investing accordingly might not be easily profitable for many people. Hence, it is essential to review plans frequently. Also, it is most likely that your financial situation will change in future, and so will your needs. Hence, review your goals, if required and make fresh changes to stay on track. Also, keep reviewing your insurance policies, savings & investments to check for any disparities.
Thus, for an effective financial planning, check the above pointers to stay on the profitable side. Never miss on researching well before investing &, if required, get help from experts regarding retirement plans, insurance plans like a family health insurance plan & others. And you’d always be confident about playing it safe!