Financial Planning: A Sure Way to Achieve Financial Goals

muthusamy By muthusamy, 22nd Feb 2011 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Money>Money Saving Tips

Most us fail to plan our finance at the early stage itself. The individuals and families feel the absence of financial planning when the retirement age is fast approaching or their children’s education demanding huge funding or the desire for their dream home.

What is Financial Planning?

Financial Planning can be defined as a process wherein the individual develops the ‘financial roadmap’ to plan and streamline the investments and to achieve his or her specific financial goals over a period of time. Financial Planning needs the commitment of individual to have control over the destiny of his or her finance.

Why it is Important for You?

Most us fail to plan our finance at the early stage itself. The individuals and families feel the absence of financial planning when the retirement age is fast approaching or their children’s education demanding huge funding or the desire for their dream home. You may find all these financial goals as the very difficult road to navigate in the absence of financial planning. So it is a must to have a sound financial plan for your entire life span. You will the comforts of life by achieving the specific financial goals at every stage of your life – supporting dependents, getting yourself married, getting children, educating children, buying your dream home, celebrating your children marriage, retiring peacefully and so on. Don’t you understand that it is a continuous process?

Some of you must have read few concepts of financial planning in the business and finance sections of the newspapers or in some personal finance magazines or while browsing your Websites. The financial concepts like salary, pension, income, expenses, debts, loans, saving, banking, fixed-deposits, interest rate, insurance, income tax, retirement etc, are much familiar to you. But you feel it difficult to apply these concepts to develop the solid foundation for your personal financial system.

Financial Planning: Information about Your Past, Present and Future

All the discussions you have read might have triggered you to give a thought about the future of your personal finance. Your focus will be lying on planning for the future to improve the structure of your personal finance. Naturally every planning will have focus on its future only. Strangely, financial planning needs all the data in relation to your financial histories as well as your current financial conditions or situations. The prescribed steps in financial planning require the history of your income, expenditure, saving and so on. The detailed picture of your present financial position throws light on your values and priorities of your future. Therefore any financial planning process needs to broken down into three important groups or categories: (a) the personal finance of the past; (b) the present and (c) the future. Certainly these data will help you to draw the sound financial plan for your future.

How to Set Your Financial Goals?

Before entering into the sphere of financial planning, brainstorm your values and priorities. What you would like to achieve financially for the future? You may arrive at a good number of requirements. It can be your present requirements like TV, fridge, personal computer, washing machine, furniture and so on. It may be your vacation tour, pilgrimage, visiting relatives, club membership and so on. If you are specific in buying your dream home or in funding your children’s higher education in a western country or arranging your daughter’s marriage, you need planning.

Now convert all the desires in terms of financial goals. For example, “I will buy a car after five years at a cost of rupees ten lakhs.” or “I will purchase a three bed room flat at Chennai city within 10 years at cost of rupees one crore.” Your goal must be realistic and should have a time frame. You must believe that your goals are very sound and achievable. Review your list of goals. Categorize your goals according to your values and priorities.

Commence your financial plan

In the implementation of the process of achieving your goals, you must be very meticulous in reviewing the strategies of your investment, strict discipline in asset allocation and detailed budgeting and review.

Review Your Past History

First step is to commence from the past history and to address all the problems of your past. The first document to examine is the credit report of the individual. The debt information will give an indication about the list of debts as well as information about the portion of your income goes towards interest, loan installments or EMI.Analyze your debts in terms of your financial goals.

The next step is to look into the individual’s spending habits and expenditure pattern. Whether the individual plans his or her budget and controls the expenditure with in the budget. Whether the individual maintains his or her account and reviews periodically.

Review Your Present Status

Prepare detailed monthly expenditure under different heads. Review your income and expenditure. If the expenditure is not within the planning limits give a detailed analysis about the heads under which the expenditure crosses the limit and for what reasons. Now find all possible ways and means to cut your unnecessary expenditure. Consider one debt after another. Arrive at detailed plan for repayment of your debts at regular intervals. Review each head and make it sure that the planning and expenditure are even and cut short of deficits. Now you are able to allocate certain amount towards payment of debts.

Plan for Your future

This is part of financial planning that most people are thinking about when they sit down to start their savings for the future. With the other two phases complete, this phase becomes much simpler to execute and much more realistic to do well. There are many different aspects to what you might plan for your future, some of which you’ll want to consider now and others which you’ll come back to at a later date.

All the exercises carried out so far will guide you towards saving. Start separate saving accounts for each category’ say for example emergency funding, children education, medical expenditure. Determine the percentage of your salary or income goes to these accounts. Take a decision that I will save certain percent from my salary

Your budget should have provision for insurance. Life insurance for self is a must. Also have insurance cover for the spouse and children. Medical insurance coverage for the entire family either through the employer or through purchase of policies is the next priority. Also insure your car. .

Your savings must be invested properly. Look out the avenues of fixed deposits, government issued bonds, mutual funds – debt funds, tax saving funds and so on. Prepare detailed plans of investments.

Finance Planning Literacy

Start attending different personal finance meetings, workshops, seminars. Subscribe simple magazines on these subjects. You may also seek guidance and support of financial planners.

Start all the possible things to improve your personal finance for your future. Improve your income by various means of your expertise. Understand your past mistakes. Minimize your expenditure within the reasonable limits. Save money to invest. Invest money to improve your portfolios. Divert money to achieve your goals.


1. Financial plan
2. The basics of financial planning Marco Angioni II
3. The basics of financial planning Darrell Victor
4. Personal Finance 101 Jeremy Vohwinkle Guide


Debt Consolidation, Debt To Income Ratio, Financial Goals, Financial Planning, Investment Decisions, Investment Opportunities, Personal Finance, Saving Tips

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A freelance writer and Internet marketer. Muthusamy is passionate write.. You can earn more money for your fresh posts & republishing your posts. FREE SIGN UP click

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