The world has learned its lessons from an unprecedented pandemic, COVID-19. There will be huge changes in our personal as well as professional practices across the globe. If you have not learned from it, then it is a missed opportunity.
Although there are a number of things on which we can go on discussing, I will limit the scope of this article to one's financial planning. I am going to discuss today only financial planning.
Everyone loves their family the most, and whatever we do is generally done keeping in mind the well-being and happiness of our family. But are we doing enough? Are we investing enough to secure our future? Are we insured enough to secure our health and secure our family's well-being in case we are either critical or no more? Are we financially ready to face such a pandemic-like situation in the future?
Why is financial planning a must for every individual?
There's a famous quote of Winston Churchill that says, 'Failing to plan is planning to fail,' which shows the importance of planning. And when it comes to financial planning, every individual should be aware of its importance.
Financial planning helps to meet your short-term as well as long-term financial goals, and in case of failure to meet these goals, financial planning helps to create a rescue plan so that it can fulfill all its financial objectives.
So, here are some major reasons that tell us why the planning of finances is helpful for us, as below:
a) Managing Inflation
b) Enjoy retirement life
c) Pay off your debt.
d) Save Taxes
e) Meet your short-term as well as long-term financial goals, etc.
So now classify investments into 2 types. Long-term 30% and short-term 70%
Long-term investments are to be made for your retirement, buying a house, acquiring assets, paying off loans, saving for a child's education, etc., that would give you financial freedom.
Short-term investments are for something that you would need in the immediate future, like some medical emergency, an emergency fund, wedding, minor repairs and home improvements, travel, etc.
While working on the above step, please consider tax planning and insurance in it. Because it's important to plan how to save the investments from misfortune.
Let's talk about investment first.
A) Investments
Many people live lavish lifestyles, spend heavily, and buy things that they can't afford or even don't need. When some adverse situation like the current pandemic comes and they can't earn their regular income even for a month or two, their so-called lavish lifestyle creates breathing problems for them. Many even can't afford to pay their EMIs for a home loan or car loan or any other loan. They were so well off, they shied away from asking for help from their near ones.
Why can't we plan our finances well? Why do we spend without first saving for our future? The formula for our cash outgo (total spending) should be total earnings less total savings. So if your formula for total savings is total earnings less total spending, please change the formula. Have a target for savings and stick to that at any cost.
Let's summarise the investment products one should choose.
- Provident fund (PF / PPF):
- Fixed/Term Deposits:
- Recurring Deposits:
- National Pension Scheme:
- Gold/Silver/Jewelry/Stone:
- Real Estate:
- Investment in share market:
- Investment in Mutual Funds:
- National Saving Certificate Scheme (NSC):
- Senior citizen saving scheme (SCS):
- Monthly income scheme (MIS):
- Kisan Vikas Patra Scheme (KVP):
- Sukanya Samridhi Account (SSA):
- Bonds:
- Debentures:
Now talk about insurance.
B) Insurance
There are basically two types of insurance that are unavoidable.
Let's summarize the insurance products one should choose.
- Health Insurance:
- Life Insurance:
Now that you have done everything. You have the biggest task to do. Follow the above plan throughout the year, monitor your plan, correct it for the better, and stick to it.
We wish you to achieve your financial goal with freedom!!!
DISCLAIMER: We have only listed the investment products' names in our blog. The information/contents on this blog are intended for general information purposes only. Please read the scheme-related information carefully before investing. However, we reserve the right to remove the investment products' names from the listing.
The author can also be reached at shahjigar33@gmail.com.
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