The first step when you start saving is to do financial planning by creating a financial plan.

What is financial planning? Hit “Retweet” for maximum reach Financial planning is a step-by-step approach to plan-

  • Income
  • Expenses
  • Savings
  • Investments

It is the process of managing and planning your finances at each stage of your life so as to meet your life’s goals.

Why is financial planning important?

It serves as a guide for all things finance and helps one to

  • Beat inflation
  • Have enough money for goals like retirement, marriage, etc
  • Helps you maintain your standard of life or upgrade to a better one
  • Helps you fight emergencies without eroding your valuable savings

Some features of Financial Plan

Insurance

  • Insurance helps you fight any unforeseen health issue you may develop, that may affect your savings
  • Health insurance helps you fight immediate monetary needs during a disease
  • Life insurance helps family with payments in case of death

Expenses=Income-Saving

  • In the initial years, it is crucial to saving aggressively
  • Only spend after you save a large portion of your income
  • This will help create a corpus.
  • A financial plan will help you get a full picture of income, expenses, and savings

Life Goals

Some of the important goals that people generally have –

  • Retirement (the biggest and most expensive goal)
  • Buying a house
  • Wedding expenses

A financial plan will help you plan for all these goals.

Asset allocation

Portfolio should have the following assets –

  • Equity
  • Debt
  • Real Estate
  • Gold

Your investment portfolio must have all asset classes in the right proportion. A financial plan after proper risk profiling can help you decide the right proportion of each class

A good financial plan will take time and effort when created for the first time. But when created correctly, it can help you avoid all the problems throughout your life and help you be prepared for any uncertain events.

Therefore be prudent and create a financial plan! Show Financial Planning interest with JST here.

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Disclaimer

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