Financial planning is a systematic method of planning a facility in order to get maximum returns with minimum risk. These include: investments, taxes, education, children's futures, cash flow, insurance, business succession and preparedness. There are two types of financial planning: the natural and legal persons. Create With basic knowledge and determination, and follow a budget, you can mange your own finances. But sometimes because of the complexity of a financial strategy,professional help is needed. This assistance is assumed to be known by the experts as the financial planners. You can an individual or a company and are typically used by organizations to address issues such as financing there are organizational budget and determining the effect of providing certain financial decision other areas of finance.
The following steps are in creating a personal and financial plan involved:
Step 1: Determine your financialTargets (such as the inclusion of higher education for your medical expenses, dealing with medical emergencies, buying a new house, ensuring the quality of life in retirement, improve your standard of living, etc.) and prioritize them.
Step 2: Determine your needs (eg, buying a laptop, high-end mobile phones, home appliances, car, etc.) and prioritize them.
Step 3: Determine how much money needed to fund each goal and the desire.
Step 4: Determine your current location. It includes the provision of yourannual cost, annual savings and available resources.
i) Determine the annual expenditure:
House Rent: RS 2750
Water: 100
Electricity: 225
Cable: 150
Financial assistance: 175
Transportation: 275
Food: 3500
Phone: 275
EMI: 1777
Entertainment: 300
Other / Unexpected: 1000
Total monthly cost: 10, 527 / --
Annual expenditures: 10, 527 * 12 = RS 1, 26,324
ii) establish the annualSavings:
Annual savings = [Gross-Total Income] - [Annual Expenditure + Total Tax Paid]
= 2, 10000 - [1, 26324 + 15500] = RS 68, 176
iii) Determine the resources available
Their qualifications, experience, salary, the opportunity for growth in your career, occupied property, your current savings and investment decisions are your available resources.
Step 5: Determine to what extent your goals and desires can be achieved through the available resources.
Step6:When the available resources are not sufficient, then you must pursue the following strategies:
i) Increase your financial resources through the investment planning
ii) Reduce your taxes through tax planning
iii) cutting your monthly expenses
iv) Set your goals and aspirations more realistic.
Step 7: Periodically monitor your financial planning and review it. If there is a dramatic change in a life situation such as marriage, children, divorce, serious accident,and death in a family, etc., you must complete your financial plan on the ground review
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