Many of us wish to take up their own financial planning but they are either in the state of confusion as to how to approach financial planning, or are still contemplating, whether they need it or not?
Well, WE ALL NEED TO PLAN OUR FINANCES!
There are many calculators, information about different investment options as well, thumb rules etc available on internet for us to read but, Its highly important to understand our perspectives, thoughts and emotions to start this journey along with some must have things about money management.
Here are five simple things to consider, when you wish to start your Financial Planning!
1. Know where you ‘Stand’ today Financially:
Its important to understand our current financial elements like our real income, income streams, their stability, our assets, liabilities etc. Also, its better to know our thoughts and perspectives about money, investing and spending, our spending patterns, investing preferences, risk profile along.
When these quantitative and qualitative aspects are clear, it makes the financial planning journey simpler.
2. Decide on your ‘Future Goals’:
We all have some needs, financial responsibilities and aspirations to follow. They need money!
To plan for sufficient money, its important to convert them into goals. Goal based financial planning,, thus helps us to get clarity, focus and discipline in money management.
So, better to shortlist them and make our ‘Goals list’ ready!
3. Emergency Fund:
Financial planning is not only about future, it is also to make sure that our ‘Present’ is secured too!
In any moment of financial emergency, we should be ready with our own emergency fund.
Typically, it should be equivalent to six months of our monthly expenses. We should prioritize and create the same.
Its better to invest in such investment options which are highly liquid and simple to transact, so that we can receive money in our bank a/c soon as possible.
4. Check for Insurance:
‘ Insurance’ is one of the base of financial planning. ‘Term Insurance’ and ‘Health Insurance’ are very important insurances which we should have.
Even if you are employed, and your employer is providing you with the same, you should apply for own policy in personal capacity.
It helps to protect our ‘Financial Wellbeing’ and ‘ Financial Independence’ !
5. Investing Journey:
When we are ready with ‘What’ and ‘Why’ of our finances, its time to start Investing!
With defines Goals, risk profiling and investment tenure, we need to choose best suitable ‘Investment option’ from many!
Though, there are many options available today, its better to choose the one which is suitable to our requirements.
Last but not the list, understand the option well before investing and take a regular review once you invest! You should be confident and clear while investing your hard-earned money!
Financial planning is simple if we have our own clarity of thoughts and knowledge.
Let’s keep it simple , Always!