How to Chalk Out a Perfect Financial Plan?

Mar 25, 2019 | 1 month ago | Read Time: 3 minutes | By iKnowledge Team

We tell you what are the most essential things you must know when creating a financial plan.

With financial planning, you start keeping tabs on your spending habits. This is crucial considering the investments you want to make for your future. With the right approach and a well-charted financial plan, you can make the right investments for a secure future.

How to Chalk Out a Successful Financial Plan?

A successful financial plan requires a different approach and a proper mix with regards to expenditure, income, investment and debt. You must get the right combination based upon your risk appetite and your expectations. Over the years, financial planning has changed considerably. However, you can plan properly if you know these three things:

  1. Don’t let expenditure exceed income: This goes without saying that you should keep your expenditures under control. Many people fail to understand this basic element which in turn pushes them towards debt and other alternatives. You can easily overcome this by starting a saving plan. If you take a chunk out from your income to save and you happen to spend the rest, you will see that your savings will have you cope up in the times of dire need.
  2. Budget Allocation: Promise yourself that you are not going to spend a penny more than what you decided. Hard choices must be made to follow your budget even if it means upsetting your close ones, you can only rely on yourself in times of crisis. Also, while allocating budget make sure majority goes towards repayment of debts, especially those with high-interest If you do not get rid of the loan, you will lose your savings against it in the form of interest.
  3. Follow the cycle: Once having planned, it is crucial that you stick to it and do not dwindle. As a rule, when it comes to financial planning, you must save an emergency fund, pay off debt with high-interest and only then start with investment. As a rule of thumb, emergency funds must cover up to 8 months of your monthly household expenses, so make sure you have enough saved in case of any uncertainties or mishaps. You must keep this money ultra-safe, either in a debt fund or a bank account so you don’t lose it and can access it quickly.
  4. Review and diversify portfolio: Review your investment portfolio, at the start of a new year. This is needed especially if you have invested in equity-based stocks or unit-linked insurance plans (ULIPs). This evaluation is needed because your investments are meant for the long term, and intermittent reviewing of the fund’s performance could result in optimum portfolio returns.


While looking at your portfolio’s performance, do not look at it in isolation. Compare the scheme or ULIPs return with its benchmark return. Aegon Life’s iInvest Insurance Plan offers a combination of protection and investment. It is designed to offer a considerable degree of flexibility, making it well suited to the first-time investor and market expert alike.


  1. Create an emergency fund

    Thanks to demonetisation, interest rate on bank fixed deposits is falling. So, it’s time to look at other avenues where competitive interest rates can be availed of without compromising on liquidity. This is where you can create your emergency fund. Investments in stocks, gold, recurring deposits, provident fund, and other such avenues will help you prepare for life’s contingencies. Also, having invested in a health insurance plan will help in times of a medical emergency.

Bottom line

If you get these four things right and invest carefully you are heading towards a financially secure future. To manage your money effectively, you need to have a household budgeting tool. There are several online tools available which can help you keep track of your expenses, helping you cut down on splurges. So, create your personal home budget, and follow the above listed financial plan.

Reference Links:

II/Mar 2019/4897

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