When you hear the term financial planning, the first thing that comes to the mind are complex financial statements and financial advisors. Ever thought about putting together your own financial plan? No one could know your financial needs better than yourself. Planning for a secure financial future might seem like a daunting task, especially if you are not sure about what your financial goals are. Intimidated by the uncertainties, most of the people end up hiring financial advisors to chalk out a financial plan for them. However, it is not always necessary to hire a professional to get your finances in order. Given below are a few simple steps that will help you do your own financial planning:-
- Set goals: – Goal setting in relation to your finances is the first step towards planning your finances. You need to be clear about what you want to achieve financially so that you can plan accordingly. Think about both short term and long term goals. Short term goals would include paying of small debts like credit card bills and long term goals would include children’s educational fund, retirement funds etc. To help you estimate the amount of money required, there are financial calculators such as retirement calculators, term premium calculators etc. which are available in the Aegon Life website.
- Asses your current financial standing: – Before you set about planning for the future, you need to have a good understanding about your present financial situation. Calculate your net worth by subtracting your debts (liabilities like mortgage loan or credit card balances) from the total amount of what you own of value (assets like your retirement and bank account balances). Don’t be disappointed if your balance is negative. A sound financial planning will enable you to turn around your finances.
- Stay protected: – you need to make provisions to stay protected from unforeseen financial disasters such as accidents, loss of job, high inflation etc. To minimize the impact of such financial hazards, insurance is a must. Life insurance, health insurance and motor insurance must be a part of your financial portfolio. Even if you have existing insurance plans from your employer, it should be supplemented with insurance that you buy on your own. Chances are, you need more coverage than you think.
- Learn to invest in the stock market: – Investing in the stock market is a great way to boost your wealth. Educate yourself on the basics of investing, learn the differences between stocks, bonds, mutual funds and exchange-traded funds, the various risks involved and the importance of diversification.