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Sunday, November 14, 2010

Basics of Financial Planning

Financial Planning is a critical use in ensuring your Long-Term Financial Security in all possible ways, Indeed it’s a roadmap to achieve Financial Freedom in different stages of your life like buying a Home / Car or planning a vacation abroad.

• Emergency Money Planning

• Child’s Education / Higher Education Planning

• Child’s Marriage Planning

• Retirement Planning

• Passing the Created Wealth to the next Generation.

There are some basic questions to answer for doing financial planning:

• Where you stand today? What is your current financial situation?

• Where do you want to get to? What is your vision of your future financial situation?

• Will you be able to get there? How do you plan to achieve your vision?

For a financial plan, you need to analyze your financial needs & goals here as mentioned above.

One should measure in terms of money that what resources one need to meet this stages of different goals and also the time period to achieve these goals.

Finally, one has to write an action plan so that to fulfill the Plan what products are useful to buy and savings to be done or increase/decrease in future too.

Your Life - Your Goals

What financial goals should you be thinking about?

Anything you want to do in your life can usually be quantified in terms of the money that you will need to spend on the goal you wish to fulfill. All goals have a financial value attached to them. For instance, if you want to buy a Car, you can easily calculate whether it will cost you Rs. 4 lacs or Rs. 12 lacs.

Some of the Financial Goals can be classified as:-

• Retirement Planning

• Education for children

• Children’s Marriage

• Emergency Fund Planning

• Buying a house or a car of your own etc

Depending on person to person we all have priorities that which goal is having highest importance and for that what to start saving to meet those entire goal on time. Financial conditions should be built on solid foundations.

Once the basic needs are met one can start thinking about the goals for their changing lifestyle, this goals can be different from one to another as different people have different needs according to their lifestyle for them and their family so that it’s extremely personal.

Examples of these goals can be:

• Buying an LCD television

• Big Vacation Abroad

• Creating your own Gym

Financial Planning is a peace of mind

Someone has rightly said: - If you have dreams, you need a financial plan!

It depends on how much effort you willing to put in for your financial plan, like in terms of Expenses, Income & Asset, and Liabilities too.