Financial Planning

29.04.22 12:21 PM - By Nikhil Tandulwadikar

You need a plan to reach your destination

Personal finance is a very broad term. It covers large area of topics that are critical for once's financial success.

Planning for financial success is called as a 'Financial Planning'. Globally Financial Planners will help you create a financial plan and implement that plan.

Financial Planning can also be done using a software or other tools. But engaging a Planner has some benefits as listed below

A.A financial planner gives you a bird’s eye view of your financial situation and an outsider perspective.

B. Record and study all aspects in detail. Create a plan with recommendation and help you implement the plan.

C. Risk management: Study your insurance requirements. Guide you to the most efficient risk cover. Asses your premium vs coverage and suggest cheaper option. Saving money on premium and covering the risks.

D. Goals planning an asset alignment. Many a times the clients asset allocation can be very concentrated in one asset. This may for a reason and may suit some specific circumstances. But for a majority of us a diversified asset allocation is must. A diversified portfolio that helps you meet your goal is the key to financial success.

PS: as a thumb rule take term insurance to the tune of more than 10X of your annual income

E. Income and expenditure or cash-flow analysis. A good understanding if cash-flow help in channelling resource in best possible manner. Cash-flow analysis help's in reducing liability. Helps you in managing and sustaining desired lifestyle. Increase your savings. Fund your goals in the best possible manner. In some cases help you decide you’re the quantum of loan to take and even when.

PS: as a thumb rule 30% of our salary income should go towards goals and emergency

F. Retirement planning. Your biggest goal. Most of us done have a choice but to fund our own retirement. The process of understanding your retirement need is the most important past. Making sure that you do not deviate from the plan is why you need a planner.

G. Tax planning. Most Fp's are well versed with personal income tax rules. Tax planning can help you not only in your earning phase but also in your retirement period.

H. Wealth creation and preservation. The benefits of having a planner with you are not only the above point. A good planner will help you make less mistakes while investing. They can also help you by keeping you unto date with relevant financial news that may impact you.

The work of financial planner (FP) is to collect financial information

1. Goals planning

2. Cash-Flow

3. Insurance,

4. Investments

5. Income tax

6. Loans and liabilities

Financial Planning Standards Board or FPSB which over sees and regulates Certified Financial Planners CFP Mark in India describes its process below

click hear for the link

FPSB’s Financial Planning Process is a collaborative, iterative approach that financial planning professionals use to consider all aspects of a client’s financial situation when formulating financial planning strategies and making recommendations.