Financial Planning is the process of creating the ideal blueprint to reach your future life goals. Every human being is different in terms of demographic, needs, income, expense, lifestyle etc., but everyone has a few very important dreams for one’s self and one’s family which requires the financial resources to be fulfilled. The process of creating the financial plan is a scientific way of converting these dreams into the goals and goals into the reality.

The process of creating financial Plan involves broadly the following steps:

  1. Primary Assessment Phase : During this first phase we understand few very important aspect of your financial life like your finances, i.e., your income, assets, and liabilities, your goals, i.e., your current and future financial requirements and aspirations, your appetite for risk
  2. Draft Plan : Once we gather the required information we analyze it and then with the help of the advanced technological tools along with our expertise we draft the basic plan and present it to you. Once the plan is drafted it is presented to you and explained the strategy behind the plan. After discussing with you the plan is re drafted if necessary based on our discussion and your inputs.

The output of the financial planning process is a personal financial plan that you the ideal roadmap, this will guide you in managing and investing your money wisely in a way to achieve your future life goals keeping in mind inflation, real returns, and taxes. In short, financial planning is the process of systematically planning your finances towards achieving your short-term and long-term life goals.

Life Goals

Most people nurture dreams of owning a bigger house or car, exploring the world, giving their children the best possible education, a blissful retirement, etc. Basically, these dreams are life goals. Consider this example:

Mr and Mrs Khanna, 35 and 32 respectively, have a three year old son. Both work in private sector companies. Mr Khanna plans to retire when he’s 50. From their current one bedroom rented suburban Mumbai apartment, the Khannas hope to move to their own two bedroom apartment costing around Rs 25 lakh within the next five years. They own a small car, for which they have availed of a loan. Mr Khanna reckons that he will need Rs 15 lakh for his son’s higher education 15 years later. He also wants to build a corpus of Rs 75 lakh for his retirement.

While distinguishing short term goals from long term goals, you must keep in mind that, as a general rule, any life goal that needs to be met within five years can be considered as short term. Beyond that, any other goal can be classified as long term. By this classification, the Khannas’ goals can be classified as follows:

Short Term Goals Long Term Goals
2BHK apartment Son's Heigher Education
Retirement Corpus

Using a similar yardstick, you may classify your own life goals. Each of them needs financing. How you plan your finances, to have the right amount at your disposal at the right time, is what financial planning is about.