Everyone has New Year’s resolution for a healthier and happier life. Some of them are achievable some are not. But one important goal that everyone should set to achieve is financial goal, which can be achieved by proper financial planning and systematic investment. If you haven’t started financial planning – start it now. It’s a myth that financial planning is only for the people who earned a lot of money or people of certain age can opt for it. Financial planning is for everyone, people of all ages.
Set financial targets and keep it in the mind. These goals can be short term or long term like, building a dream home, buying a dream car, savings for the kids’ education, vacation planning, retirement planning, or simply tax savings. Goals should be SMART i.e., Specific, Measurable, Achievable, Relevant, and Timely. Apart from this, set budget carefully, stick to it, and track it on regular basis.
Spend less than what you earn and save more money. Save money to achieve the decided goals. Figure out where you can cut the cost and make changes in the spending pattern. Don’t add more debt which means try to reduce the use of credit cards and pay off the credit card bills on time. Stop taking unnecessary loans especially personal loan, it is expensive and not advisable. Keep aside some emergency fund to meet the surprises and uncertainties such as the loss of a job, sudden illness etc. The major portion of the income around 40 to 50 per cent of the income should go towards household expenses, including groceries, house rent, etc., 20 to 25 percent of the income should be spent on outing, food, and travel. And remaining portion of the income should be the savings to meet the financial goals.
Don’t keep money in savings accounts only but invest it in the financial instruments where a better rate of return is expected. Invest in equities, bonds, money market, mutual funds, bank’s fixed deposits and other tailored made investment options which are available in the market. Invest money in diversified funds and don’t put all the savings in same the instrument. If it is a short term financial goal, invest in the liquid fund, short term debt funds, and fixed deposits. For long term goals invest in equities and mutual funds. Don’t blindly follow anyone’s advice instead do proper research before investing in the financial market. Moreover, it is advisable to opt for the right insurance to cover risk like health insurance and life insurance. Start investing during the early twenties; it will help to get the desired corpus within the right time. Apart from this, retirement planning in a younger age will help to generate more funds in the future.
In financial planning, there is no ‘one size fits all’ approach. The finance plan, investment pattern, risk profile and personal needs differ from person to person. Finance needs to be personalized according to these personal factors. Once the investment is done, the task is not over yet. Timely check and reassess the portfolio. Financial planning at the right time will help to achieve all the financial goals timely and smoothly. One can live a better life if personal finances are planned in a systematic way.
– Nilam Thakkar