Everybody has goals in life, but people often have no idea to go about realizing them. Be it buying a home, saving for college, or starting a business, everything requires money. This is where financial planning comes into the picture. Financial planning provides meaning and direction in order to meet your financial goals. A sound financial plan will act as a buffer during the various ups and downs of life. It helps you to convert your financial goals into action plans, and provides the direction and discipline to achieve these goals.
Contrary to common belief, financial planning does not involve complicated calculations and risky investments. There are various simple and safe investment tools available these days that can be safely utilized by all. Here are a few simple financial planning tips that everyone can follow:-
- Asses your financial situation: – In order to know your financial standing, you need to compare your assets against your liabilities. Document your total assets and liabilities along with their value. Then, subtract your total asset value from total liability to obtain your personal net worth. Your net worth is a reflection of your financial situation at this point in time. This valuation will assist you in planning your future expenditures in an efficient manner. When calculated periodically, your net worth can be viewed as a financial report card that allows you to evaluate your current financial health.
- Set financial goals for the future: – Regardless of the life stage you are in, you are likely to have some short and long term personal financial goals. Setting tangible goals and following them while monitoring your progress, is the key to success in achieving all of your financial goals. Therefore, list down your goals as well as classify them as short-term, mid-term or long-term goals.
- Invest adequately: – There are several investment options available in the market to suit the financial needs of all types of people. If you are risk averse, opt for low risk investments such as fixed deposits or debt instruments. On the other hand, if you are ready to take risk, you can opt for equity based investment instruments that provide higher returns. To ensure financial safety in the long run, opt for insurance plans such as iGuarantee to get assured returns on the investments.
- Insurance: – Life is full of uncertainties and risks. At times people fall prey to mishaps and adversities. Hence insurance has become a necessity, as it provides financial protection against incidental expenses. Taking up a life insurance policy is especially important if you have dependent members in your family. One is also eligible for tax benefits on the insurance premium you pay. Moreover, the investment gains that your policy fund generates are tax free.