Checklist for Financial Planning

What is Financial Planning?

Financial Planning is a process that Reviews your current financial position, sets goals for the future and creates a plan to achieve those goals

Reviewing your Finances

You should begin with a review of your current financial position. Start with a top down approach.Do the following to ascertain your position

  1. Total assets + Total savings – Total debt = Your position
  2. Work it down further by doing a cash flow analysis
  3. Monthly income – Monthly expenses = Your cash flow
  4. Further analyse your expenditure in more detail
  5. Where are you spending money?
  6. Clothing, entertainment, eating out
  7. Identify opportunities to save money
  8. Eg: eating out lesser could save you Rs 1000 per month

Setting Goals

  1. Identify your goals
  2. Buying a new car, buying a house, taking a vacation, educating your children etc
  3. Understand the trade offs
  4. Lesser money in the short term for clothing, entertainment etc
  5. Set clear targets and time frames to achieve your goals
  6. Saving Rs 2000 per month will help educate your children
  7. Saving Rs 1000 per month will help fund your vacation

Creating A Financial Plan

  1. Include a mix of short and long term goals
  2. Convert your goals into rupee amount and set a deadline to achieve them
  3. Diversify your investments according to your risk profile
  4. Look for ways to minimize tax
  5. Don’t forget insurance
  6. Start retirement planning
  7. Get professional advise in required
  8. Don’t wait, implement your plan today

Review your plan

  1. Life is always changing, so it is important to review your plan if any of the following
  2. Your circumstances change
  3. Through marriage, new dependants etc
  4. Your rules change
  5. Through taxation etc
  6. Investment climate changes
  7. Through market boom and busts

Tips To Stay On Track

  1. Stay focused on your lifestyle goals
  2. Don’t be distracted by fear or greed
  3. Diversify your investments according to your risk profile
  4. Keep a long term view
  5. Review your plan regularly
  6. Get advise from a professional