Skip to content

Attention businessmen and businesswomen.. “here is how you can plan your finances!”

The one who takes the risk, is ‘businessman’! The one who becomes financially independent him/herself and also lets others become financially independent is businessman! The one who is a part and strong pillar of the country’s economy is businessman!

Well, when he/she shoulders so many responsibilities and duties all by oneself, ‘personal finance’ is the crucial are which often gets neglected. They get so busy making progress in their own venture, that planning their investments and finance takes a back seat. When they do, they often make hasty decisions or fall pray to miss-selling and end up investing in wrong products.

I recently met few businessmen at one event, and we discussed many such things that a business person often face.

To put your personal finance in front seat, lets see how you can look for own finances and plan them well!

  1. Clear demarcation between ‘Personal Finance’ and ‘Business Finance’:

Being into business, profits and losses are dear to you. You are always engrossed into the calculations about how to make higher profits. This may lead to mixing your personal finance and business finance by not maintaining personal accounts separately. Though, for tax purposes its mandatory to do so, there should be clear demarcation. You must not enjoy windfall profits for spending on your personal joys. You must decide how much portion of your profits will be your income and how much should be re-invested in the business.

This eventually helps you to decide how much loans you can take for personal use,how to plan budgets for your business and finance, how to file your income tax and business taxes separately.Till the time you get settled in business, you need to strictly follow this.

2. Manage the risk well in personal finance and investment:

Being in the business means facing various types of risks. You face them gracefully and earn profits. Its a continuous process to remain profitable and increase it gradually.

So, when you plan your investments and finances, take calculated risks.

All business persons are risk takers. Its their natural trait. They use this in their own personal investments too and take unwanted risks to earn more returns from the investment.

Well, its not wise to take unwanted risks and go behind unsuitable products. For this, you must understand your own risk appetite ; means how much risk you can take on your investments. When you understand this, you then select product whose risk level matches with that of your risk appetite.

3. Get the basics covered:

For your own financial planning, getting the basics covered is very important. These are the foundation of your financial plan. Lets see what are they-

i) Contingency Fund- Contingencies come anytime in anyone’s life. No one has any control on them but yes, we can surely plan for such contingencies financially.

To plan for it, you should create a ‘Contingency Fund’. Your six months average income should be the amount you should keep in your contingency fund.

‘Liquid Mutual fund’ is ideal to invest for your contingency fund.

ii) Health Insurance- These days various types of deceases are coming up and cost of medical treatments is also increasing in parallel. Medical inflation is at alarming high. To curb this, you must have ‘health insurance’ for you and family.

You can easily buy a health cover for you and family directly from insurance provider.This is easily available online. You can have ‘family floater’ plan for you and family.When you have health insurance, you are insuring your health and all the probable medical expenses that can occur in future.

Earlier you get, better it is.

iii) Life Insurance- Everyone’s life is precious and it cant be compensated by anything. But, when the ‘karta’ of the family dies, his/her family members face emotional and financial loss. Nothing can compensate their emotional loss but a right life insurance policy can surely compensate their financial loss and can help the dependents to achieve their goals in life and be financially independent.

When it comes to life insurance, you must choose ‘Term Insurance’! All the other type of policies give mix of investment and insurance , with higher premium and comparatively less insurance cover. This doesn’t give justice to the idea of ‘life insurance’. But, Term insurance is a pure form of insurance. Here, you get the insurance cover till the end of the term chosen by you. Here, policyholder doesn’t get anything if he/she survives the term but is he/she doesn’t, then his/her dependents get the sum insured.

This way it fulfills the very purpose of ‘life insurance’. Earier to take the term insurance, better it is!

4. Keep your family informed about your personal finance and investments:

You must keep the details about your bank accounts, loans taken, EMIs per month, contacts and other details of the important associates like your lawyer,chartered accountant, relationship managers if any etc, login IDs and passwords of your bank and other investment accounts, details about insurance policies, Investments made, details about nominations in all investments and insurance etc.

All these records must updated from time to time and your spouse and elder members of the family must be well informed about it.

This keeps the transparency in the family relations and your spouse is aware of what to do and how to do it in case of any emergency and issues which you cant attend and pay attention to.

5. Pay and plan your taxes on time:

Many business people follow the practice of paying all their business and personal taxes on time. But, due to last minute rush, if you are not able to look after filing your income tax, and end up investing in any wrong product for tax savings, then please plan your tax saving well in advance. Apart from traditional products like PF, you can also consider NPS, ELSS etc.

6. Start your financial planning:

As we have already discussed, being in the business and managing your own venture is a 24*7 duty. But, to have the backbone of your personal finance strong enough, you should undertake your financial planning well in advance.

For this, you should take the help of an expert professional who can understand your risk appetite , goals in right context, will guide on different investment avenues and can plan them well.

A SEBI registered investment adviser is ideal for this; who can give unbiased advice to you.

So, keep it in your priority list!

So, getting your business big is your passion, but when you have a support of right financial plan, you can achieve new heights peacefully!!

Leave a Reply

Your email address will not be published. Required fields are marked *