But the good news is that you can overcome these obstaclesfinancial planning with strategic and create a wealth-building roadmap. 

In this blog, we’ll explore five smart money moves that every corporate employee should implement in 2025. These actionable steps will not only help you reduce stress but also pave the way to financial freedom.  

1. Prioritize Emergency Funds

An emergency fund acts as a financial safety net during unforeseen circumstances like job loss, medical emergencies, or unexpected expenses.  

Actionable Tip:

Set aside 3-6 months’ worth of essential expenses in a high-yield savings account, Fixed Deposits or liquid mutual funds.

You can automate a portion of your salary into this fund every month to ensure consistency.  

Real-Life Example: 

Rahul, a corporate manager, avoided taking on high-interest debt during a sudden medical emergency because he had saved six months’ worth of expenses in a liquid mutual fund. His financial discipline gave him peace of mind and stability.  This very action also saved him from early withdrawals from his long-term investment thus saving him a lot of money.

2. Take Advantage of Employee Benefits

Many corporate employees underutilize the financial benefits offered by their employers, such as EPF, NPS, and insurance. These perks not only save taxes but also boost long-term wealth creation.  

Actionable Tip:

Maximise your contribution to the Employee Provident Fund (EPF) and take advantage of the National Pension System (NPS) for additional tax deductions under Section 80CCD(1B).  

Review your company-provided health insurance policy and consider adding a personal health insurance plan for additional coverage.  

Real-Life Example:

Anita, a mid-level manager, increased her NPS contributions by 10%. Over the last five years, this small adjustment boosted her retirement corpus significantly while saving her taxes every year.  

3. Start SIPs for Long-Term Goals

Systematic Investment Plans (SIPs) in equity mutual funds are one of the best tools for long-term wealth creation. They harness the power of compounding and help you stay disciplined in your investment journey.  

Actionable Tip:

Identify your financial goals such as buying a house, funding children’s education, or planning for retirement—and start SIPs aligned with each goal.

Begin small and gradually increase your contribution as your income grows.  

Success Story:

A client of Best Invest India started a SIP of ₹5,000 per month five years ago. She increased her contribution on a yearly basis and some additional investment randomly. Today, her investment has grown to ₹12 lakhs, helping her move closer to her dream of early retirement.  

4. Avoid Lifestyle Inflation

As your income rises, it’s tempting to upgrade your lifestyle. However, this can lead to a cycle of overspending and prevent you from building wealth.  

Actionable Tip:

• Automate at least 20-30% of every raise toward savings or investments.  
• Limit discretionary spending and avoid unnecessary debt.  
• Follow the bottom-up/ balloon strategy to reduce existing debt stress.

Real-Life Example:

Consider two employees who receive a raise of ₹10,000 per month. Employee A saves ₹2,000 of the raise and spends the rest, while Employee B saves ₹5,000 in SIPs. After five years, Employee B has accumulated over ₹4 lakhs more than Employee A, just by avoiding lifestyle inflation.  

5. Regularly Review Investments 

Your financial goals, risk appetite, and market conditions can change over time. Regular portfolio reviews ensure your investments remain aligned with your objectives. It helps to weed out the under-performing investments thus saving you money. 

Actionable Tip:

Schedule quarterly or yearly reviews with a Certified Financial Planner. Rebalance your portfolio if necessary and exit underperforming investments.  

Call-to-Action:  

At Best Invest India, we offer personalized portfolio reviews to help you optimize your investments and achieve your financial goals.

Book a free consultation today and take the first step toward financial freedom

Conclusion

Financial freedom doesn’t happen overnight, but small, consistent steps can make a significant impact over time. By prioritizing emergency funds, leveraging employee benefits, starting SIPs, avoiding lifestyle inflation, leveraging tax saving investing and regularly reviewing your investments, you’ll be on your way to a more secure and stress-free financial future.  

Are you ready to take control of your finances in 2025?

Let us guide you with expert advice and tailored financial solutions. Schedule your free consultation now!

The types of income tax slabs depend on different people’s segments. Let’s understand the new income tax regime and old income tax regime.

• Old Tax System-Income tax for those who want to claim income tax reductions and exemptions 
• New tax System-Income tax for those who do not want to claim income tax reduction and exemptions. 

New Income tax Slab Rate FY 2024-25

There is no change in the income tax slab rate in the Old tax regime. However, a new limit has been added under new tax regime.

Under the New tax regime FY 2023-24 ( last year) , there were limit from 3 to 6 lac, which has now increased to 7 lac.

Earlier, under the new tax regime, there were slab rates of up to 6 lakh. But this year, it has increased to seven lakh slab rates.

What is the Standard deduction?

The standard deduction is available for the salaried and the pensioners (including family pensioners). The standard deduction is increased from Rs. 50,000 to Rs. 75,000 under new tax system.

This increase in the standard deduction will save in taxes for people. It will also enhance the simultaneous shift to the new tax system.

Other changes

Family pension deduction increased from 15K to 25K.

Deduction to employer contribution to NPS increased to 14% of employee salary.

Conclusion

Ideally one should calculate income tax from the old and new tax system. Opt for a system that bring you low taxes.

It looks almost impossible to figure out what exactly to do with money. This personal finance guide will simplify the basic personal finance management and investing journey. 

Step by Step Approach to Personal Finance Management

• Understanding Personal Finance
• Setting Financial Goals 
• Creating a Budget 
• Building an Emergency Fund
• Understanding and Managing Debt 
• Basics of Investing 
• Types of Investments 
• Retirement Planning
• Seeking Professional Advice 
• Continuous Learning and Adaptation 

1. Understanding Personal Finance

Managing money for individuals or Personal finance is crucial. Personal finance management includes strategies like budgeting, saving, investing, Future goal planning and achieving them with ease.

The basic components of personal finance are:

Income- Earnings from work, investments, or other sources.

Expenses- Day-to-day expenses, bills, premiums, EMIs and other expenses

Savings- Money kept aside for future needs 

Investments- Money invested for income or appreciation.

Safety covers- Life insurance, health insurance ,accidental & critical care insurance cover.

Debt- Money borrowed that needs to be repaid with interest.

2. Setting Financial Goals

Setting Financial Goals is probably the first step towards managing your personal finances. In other words, I can say it is the best and right approach.

Steps to set goals

• Set clear SMART financial goals. (Specific, Measurable, Achievable, Relevant, Time-bound)
• Shortlist goals into short-term (less than 3 years ), medium-term (between 3-7 years ), or long-term (more than 7/8 years). 
• Choose appropriate investments based on duration, risk, market outlook and goals.

3. Creating a Budget

Wealthy may say, well, we don’t need a budget. But my dear friend it helps you to understand your surplus and deficits. This will help you to save more, and reduce unnecessary wasteful expenses.

A good budget plan helps you track income and expenses and saves you from wasteful expense habits. 

Steps to create a budget

• Calculate your monthly income-Include income from all sources like salary/business, rental income, pension or other income
• List your monthly expenses- Categorize them into fixed (rent, utilities) and variable (groceries, entertainment) expenses.
• Subtract expenses from income-: This will show you whether you have a surplus or deficit.
• Adjust accordingly- In case of a deficit, find areas to cut back. If you have a surplus, allocate it to savings or debt repayment.

4. Building an Emergency Fund

An emergency fund aka contingency fund or backup fund is the one thing that is required. It adds financial security to your armour.

 Aim to save at least 3-6 months’ worth of living expenses. If possible, have 6-24 month expenses.

This fund acts as a safety net during unexpected events like job loss or medical emergencies.

5. Understanding and Managing Debt

Managing debt is essential for financial health. Prioritise paying high-interest debt (like credit card debt) and make consistent payments. Consider the debt avalanche method (paying off debt with the highest interest rate first) or the debt snowball method (paying off the smallest debts first) and become debt-free.

6. Basics of Investing

Investing money is essential since it helps you grow wealth over time. Here are some basic principles:

• Start Early – The earlier you start investing, the more time your money has to grow. Read more 
• Diversify- Diversify/Spread investments across different asset classes such as stocks, bonds, and real estate to reduce risk.
• Understand Risk-Higher returns typically come with higher risk. Assess your risk tolerance and invest accordingly.
• Stay Informed- Keep learning about investment options and market trends.
• Review & periodic realignment with goals- Markets are dynamic and so are the investments. Periodic review is essential for smooth returns.

7. Types of Investments

• Stocks– Stocks are nothing but it is part ownership in a company. Stocks may offer high returns but come with high risk.
• Bonds-Loans to the government or corporations. They provide regular interest payments and are considered safer than stocks.
• Mutual Funds– Mutual funds are the pooled funds managed by professional fund manager. They offer diversification and are suitable for beginners.
• Real Estate– Property investment can provide rental income and capital appreciation.
• ETFs (Exchange-Traded Funds)-These funds are just like mutual funds but these are traded like stocks. They offer low fees and diversification.
• Small Saving Schemes– Post office small saving schemes offer safe and secure returns. Suitable for various needs such as one-time deposits, regular income, monthly income, recurring deposits, money doubling schemes, girl child welfare schemes etc.

8. Retirement Planning

Start saving for retirement as early as possible. Contribute to retirement accounts such as NPS, SBI Mitra SIP, ICICI Prudential Freedom SIP, LIC Pension Plans, SBI pension plans, ICICI Prudential Guaranteed Pension Plan Flexi- Should You Buy? etc. Understand the power of compounding, which can help investments grow exponentially over time.

9. Seeking Professional Advice

If you’re unsure where to start, consider seeking advice from a financial advisor. They can help you create a personalized financial plan, assess your risk tolerance, and guide your investment decisions.

10. Continuous Learning and Adaptation

Personal finance and investing are lifelong journeys. Stay informed by reading books, following financial news, and joining communities like Quora Spaces focused on personal finance and investing. Adapt your strategies as your financial situation and goals evolve.

Final Thoughts

Getting started with personal finance and investing is about building a strong foundation. By setting clear goals, creating a budget, managing debt, and making informed investment decisions, you can achieve financial stability and growth. Remember, the key is to start early, stay disciplined, and continuously educate yourself. Happy investing!

Some are willing to take risks, while others want to play safe.

Few are happy with traditional products (like post office savings, Govt. Bonds) while others are ready to take mild to moderate risk and ready to invest in mutual funds, hedge funds, alternative investments etc.

The wealth creation journey starts from the day, we take and work on careful strategy. Wealth can never be created with random plans ( investments). Random investments do fetch returns, but the Scale can’t be great.

If you want to know WHY? Please read the post on how compounding works.

Can Becoming Wealthy Be a Goal–Wealthy Vs. Rich

Usually, the terms, being wealthy and rich are used interchangeably. Both are different financial conditions.

What are the differences between the rich and the wealthy?

People might be rich but they have to compulsorily work to maintain their lifestyles and need to work for money.

But actually, what is the meaning of being Wealthy? It is essential to understand how much you require so to live a peaceful happy life.

There is no limit to human greed. Some might consider having 1 crore as being wealthy, while others might think 2/3/5/10/20/50/100… or more crores is required to be wealthy.

Most people don’t have goal clarity. Wanting 5/10/20/100/1000 crore is a DESIRE and not a GOAL. 

We tend to think of such numbers when we do not have clarity on what amount will be sufficient. So the best way to know how much will be sufficient is FINANCIAL PLANNING.

What is meant by Wealth Creation?

Wealth Creation means to build wealth using financial products. To do this we just need to invest in financial products and start the wealth creation journey.

The 17 Principles for Creating Wealth with Investment

1. Planning & Vision 

We all invest money. But have you noticed, how many of us create wealth. The percentile is quite low. Do you know why?

This might be because of lack of planning and vision. Therefore, for wealth creation planning and long- term vision is necessary.

2. Establish/ define Clear SMART Goals

Defining SMART financial goals are an essential part of the wealth creation journey.  Let us understand with an example. If you want to BestInvestIndia office, obviously you should know the proper address to reach the office. 

Similarly, if you want to fulfil your future financial requirements, you need to know your goals. Their future price tag and what amount you need to invest to pay. And of course, the instrument you need to choose to fulfill that goal.

Example: Bestii wants his daughter to go to a premier college in India. Now suppose today’s college fee is Rs. 10 lac a year. The four-year degree will cost him approximately 45 lac including miscellaneous expenses.

Thus he needs to plan to invest in some inflation-beating product for such an event.

Why Should You Opt For Goal Based Investment Planning?

3. Make a Budget & Start Investing

Budgeting not only helps you understand your expenses better but it also helps you understand your cash flow and ways to save more. It helps you to plan strategically. Saving consistently in a savings account won’t help much in the long run. Thus only investing in the right instrument will help.

4. Mindful Spending

No matter how much you earn, if you don’t opt for mindful spending, then you will continue to live paycheck to paycheck. Ultimately low savings. Here, rule 50:30:20 can help to save better.

5. Start Investing Early

Can’t invest big money. No worries! Instead, start saving early. Why? 

In the compounding formula what is in exponential format? You guess it right. It is the time. No matter how small you can save time can multiply your money.

6. Focus on Tax Saving

Invest money in tax-efficient instruments and save taxes. There are better tax-saving strategies such as tax harvesting.

Thus, only tax deduction is not a single thing. There are other ways to save money.

Tax Harvesting – Reduce Taxes The Smart Way

Top 7 Tax Saving Investments Under 80C

Top 10 Tax Saving ELSS Mutual Funds 2024 -Invest To Be Wealthy

Reach out to us, for better tax savings from your investments.

7. Invest lumpsum money whenever possible

Investing a small amount helps you to build wealth over time. But lumpsum money investment magic can’t be ignored.

 Whenever you have a lumpsum investible surplus. Just add it to your kitty. It will surprise you later.

How To Invest Lump Sum Amount In Mutual Funds?

8. Diversified Your Portfolio

Diversification can easily distribute investments across different asset classes. A well-diversified portfolio is less susceptible to the risks associated with individual securities. It takes calculated risks and helps you reduce risk ( portfolio concentration risk).

9. Be Debt Free 

Paying your high-interest debts is essential. Since one has to pay a high interest for the loans. Financial Planning includes Debt reduction planning too. This can help you pay your loan faster.

10.Patience and Discipline

Wealth creation is not a one day game. But essentially it is a  long-term journey that demands patience and discipline.

11. Make Financial Plan

You will get multiple guides online on where to invest money to get maximum benefit.

 But where not to invest is crucial to know and understand. A Financial plan helps you know where not to invest your money.

It analyses your current Financial situation and help you build wealth in long run.

Top 10 Easy Financial Planning Rules For Beginners

Why Personal Financial Planning Is Essential?

12. Revise Financial Plan Often

Making and implementing a Financial Plan is not sufficient. You need to revise the plan at least once a year or whenever there is a change in family, goals or other aspects.

13. Prepare Yourself for Contingency

Planning for contingencies is as vital as investing. Since in case of any contingency one is forced to withdraw from their savings and thus lose money due to penalties, low returns etc.

14. Buy Insurance Cover for Safety

Life is uncertain and that is the only reason we need to buy safety covers in the form of health insurance, life insurance, accidental insurance and critical insurance cover.

What Is Term Insurance-Advantages & Details

LIC Term Insurance Plans- The Ultimate Buying Guide

A Comprehensive Guide To SBI’s Term Insurance Plan

15. Educate Yourself

Education and knowledge can save us from many unnoticeable aspects, new opportunities etc.

16. Stay Away from quick rich plans/ Ponzi schemes

Avoid Ponzi schemes which promise quick money, and are scams. They’re illegal, risky, and collapse eventually. They’re unfair and can ruin your hard-earned money. Stick to legitimate investments after doing thorough research.

17. Get Help If You Need It

We Indians are born savers and we love to do our R&D and invest our money. But professional help saves you from those costly mistakes, that one might make in the investment journey.

A Financial Planner can  help you  to do this.

Top 6 Roles Of Financial Planner In Your Life

Conclusion

Wealth creation is a long-term journey. With financial planning, you can have goals clarity. Can also judge the goals duration, the kind of investments you should choose.

which goals demand how much investment and where to invest that can solve the basic problem and thereafter create wealth Confidently.

As you begin your wealth-building journey, keep in mind that the best advocates you can have are persistence, patience, and a positive mental attitude.

In today’s fast-paced and unpredictable world, having a solid financial plan is crucial for securing a stable future. This article will explore the importance of financial planning, managing personal finances  and how it can contribute to your long-term success.

Financial Planning involves creating a roadmap to guide individuals in making informed decisions about their money, investments, and expenses.

What is Financial Planning?

Financial Planning is a step by step approach to meet future financial goals. It lays a roadmap to achieve financial success, fulfilling future financial commitments, securing a person via optimal insurance coverage and money investment.

Financial Planning ensures better money, risk, debt management for an individual.

The objective is to build wealth, protect, money management you.

Also Read

Top 10 Easy Financial Planning Rules For Beginners

Understanding the Basics of Financial Planning

Setting Financial Goals

The very basic and essential part of Financial Planning is Goal Achievement. This makes identification of SMART goals even more important. The steps involved in setting Financial Goals as follows:

• Identify short-term and long-term financial goals
• Prioritize goals based on importance and feasibility
• Create a timeline for achieving each goal

Read more about How To Set Financial Goals SMARTLY

Creating a Budget

But to achieve any goal a budget planning is important and so is to track income, savings, expenses and more. The steps involved are:

• Track income and expenses till earning age
• Allocate funds for essential expenses
• Set aside money for savings and investments
• Adjust the budget as needed to meet financial goals

Managing Debt

One might have existing debts or planning to take one. Debt management is quite necessary since it pulls down the monthly take home money and reduces net worth of the individual. Therefore debt Management is very crucial in personal Finance management. Debt management involves the following basic points:

Increasing net worth of client is yet another objective of Financial Planning.

• Understand types of debt
• Develop a plan to pay off debt faster
• Minimize interest payments and fees
• Avoid taking on unnecessary debt

Building an Emergency Fund

Emergency can occur anytime. It takes no-ones permission and impact the person badly. Thus making the family financially ready for such unforeseen events is most important in personal Finance. It involves the following basic steps:

• Save money for unexpected expenses
• Aim to have 3-6-12 months’ worth of living expenses in an emergency fund
• Use the emergency fund only for emergencies only

Insurance Management

Personal Financial planning also involves management of various risk such as life, health, accident etc. This makes Insurance Management essential part of personal Financial planning. At the same time these plans also should not burn a hole in the person’s pocket.

The key is to identify the following:

• Calculate life cover required based on liabilities and earning -Insurance Coverage
• Medical cover for entire family- Health insurance
• Other insurance cover such as personal accident, fire and other
• Stop payment of non essential insurance plans
• Protecting Your Financial Future

Retirement Planning

Retirement Planning is an essential part of one’s life. in fact, it is the most important aspect of Financial planning. Retirement Planning Involves the basic steps:

Start saving for retirement as early as possible

• Consider the current Living expenses
• Estimate retirement expenses
• time left for Retirement
• Determine how much money needed to save for retirement

Read More 9 Super Easy Steps To Retirement Planning

Understanding Different Investment Options

In investing world, there are plenty investment option suitable for an individual. The essential part of Financial success is to choose from the options available as per the customer profile and comfort level. The products may involve

• Stocks
• Bonds/ GOI Bonds
• Mutual funds
• Real estate
• PF/ PPF/ Post office saving scheme
• FDs

Read more SIP Or Mutual Fund – What Is The Difference & Example

Top 20 Best Invest Options For High Returns

Diversifying Your Investment Portfolio

• Spread investments across different asset classes
• Minimize risk by investing in a variety of industries and sectors

Regularly review and rebalance your portfolio

Regular review and rebalancing is key to financial success, as it eliminates non performers, balances the portfolio and track financial goals as per the planning.

• Portfolio Rebalancing
• Reviewing the investments with goals
• maintain asset allocation
• track financial goals

What is personal Financial Planning and why is it important?

As the name suggests,Personal Financial Planning is very personal. It basically lays a roadmap to financial fulfilment and success for an individual.

In other words it is all about making you a wealthy, secure, planned, contended, confident you by using Financial planning basics and essentials.

Personal Financial Planning involves goal setting, budgeting, retirement planning, insurance planning, Tax Planning, estate Planning and more. Makes your money work for you

It is important since everyone want to be secure, wealthy make no financial mistakes, know timely for any kind of shortfalls in future money.

Personal Financial Planning is the shortest possible route to Financial Success.

Conclusion

Financial planning is not just about managing money; it is about securing your future and achieving your goals. By understanding the basics of financial planning, investing wisely, and protecting your financial future, you can pave the way for long-term success. Take control of your finances today and start planning for a brighter tomorrow.

Financial planning involves more than just managing your money. it also involves securing your future and achieving your goals.

Long-term success can be achieved throughunderstanding the basics of financial planning, making prudent investments, and safeguarding your financial future.

Take charge of your finances right now and begin making plans for a better future.

The usual question which haunts everyone’s mind is how to get the best returns.

But my dear friend, the best returns are bound to be achieved if you follow the basic investing rules.

In absence of goals, you may feel that in spite of good earnings, you are not able to progress with your money.

Without setting these goals you may feel, all you are doing is spinning the wheel all time and nothing is happening.

In this post, we will discuss about financial goal setting only.

How to set Financial Goals SMARTLY

Your Investing journey can be planned according to your life goals. This also  include

where to invest, how much to invest, and how to set realistic expectations.

You may create a good financial strategy and assure better execution. The aim is to reach your goals with the help of clearly defined financial goals or smart financial goals. 

The following is an example of a SMART financial goal:

Write them down – Be SPECIFIC

Whether you write them or not, somewhere in your mind it is clear that you want to save for your house, for your retirement, Oh! You have to pay for a loan, Kids education or buying a car or some other asset.

But, wouldn’t it be better if you write them down and be specific about these goals. Like when do you require money and how much will be required.

So, Go ahead and WRITE your goals on a diary or notepad. Be committed to your goals.

Although you are. But you know, our mind can manipulate things to make it easy. Don’nt be prey to your own mind tricks. I hope you got me right, what I want to say

For example  Retirement – At age 50 years left

or

Sorav Higher education – After 10 years.

Make Goals Measurable

  It is not enough to just write down your goals until and unless a money value is attached to them.

 It’s also about gauging the right value of your goal. Maybe you want to buy a house after 5 years. 

You may say I want to buy a house whose today’s value is 50 lac. After 5 years the value will be around 75 lac. 

I have to give a down payment of 30 lac and for the rest of the amount, I will go for a loan.

So now you are clear that you need to accumulate 30 lac.

Make then Achievable

The financial goal must be achievable.

It should not be like you give lesser time to achieve a specific goal ( than required). 

Be Realistic

Make realistic goals which are achievable.

One should not make unrealistic goals. For example, a class 8 student says I will graduate in the next one year. 

So, the goals should be realisitic

Give yourself a deadline – TIME Bound

Will anyone ever reach a goal if it is not time bound.

If not time is specified, your goal may or may not be acheived.

It is simple to create a financial plan when financial goals are well defined. If a person is clear about his goals, it is easier to prescribe a saving and investing strategy.

5 Top Common Financial Goals are

Set up a Emergency Fund :

Emergency Fund is the amount of money that you keep aside for any kind of emergency/ contingency/ unforeseen events.

The emergency can be of any type like sudden medical emergency, job loss or sudden requirement in the family. The other probable reasons to keep separate fund might be[Tweet “click to tweet”]

• Sudden job loss
• No work because of accidental injury
• Sudden hospitalization for a long duration
• You cannot go to job/leave job because you have  to take care of a family member

Read more about Emergency/Contingency Fund

Pay off Loans

One may have high or low loan amount. It may be education loan or house purchase loan, car loan or personal loan or any other.

Plan for Retirement

Retirement planning or planning a Early retirement to pursue your passion might be a good. Retirement Planning is crucial to lead a successful and happy life later also, without worrying.

9 Super Easy Steps To Retirement Planning

Why Is Retirement Planning Important?

Best Retirement Pension Plans In India?

PPF Vs NPS- Which Is Better For Retirement?

Child/self Education Planning

Higher education cost is increasing day by day. In order to get a adequate corpus at the desired age is easy, if one follow proper planning.

Best Child Education Plan

Top 10 Reasons NOT To Buy Insurance Plans For Children

LIC New CHILDREN Money Back Plan – Review

House Purchase/ Asset Purchase

You might want to purchase a house after a span of few years.

How can we help you?

At BestInvestIndia

If you are serious about your financial future, you can build a lasting relationship with us which will surely help you realize your goals.

 Financial planning is a continuous process that lasts until your goals in life are realized. 

Read more Importance Of Financial Planning In Your Life?

Top 10 Easy Financial Planning Rules For Beginners

Only a comprehensive financial plan, which addresses every area of your financial demands and conducts an in-depth examination of them, is the best course for you. 

If you want to completely organize your financial life, make appropriate investments, get rid of unsuitable products, and have a financial plan that is process-oriented and disciplined, this service at BestInvestIndia is the perfect choice for you.

We’re ready to help you with any questions you might still have?

If applied, these Step by step Financial Planning process can align investments in a better way.

Top 10 Easy Financial Planning Rules for Beginners

1.Set your goals:

Goal setting is the first step to get financial success in your life. Goals are the lifeline of investments. Saving for Retirement, child education, purchase of assets, wedding of child or your own wedding can be some of your Financial Life goals.

Reaching at a destination is remote if one do not know the destination itself.

Now first, Set your short term, mid term and long term goals. These goals should be realistic in nature. You know well calculated future amount.

If you do not know how to do it than you can take help of a Financial Planner as well.

For example your short term goal can be foreign/domestic vacation, buying a car, your own wedding or child wedding or education whereas

Long term goal may be retirement planning or house purchase or any other goal. 

Save before you spend

Align investment dates with that of the salary date and invest before you spend money. This helps you to save better.

Expenses are bound to happen if money is at your side. Basically investing in the beginning of month is a psychologic trick to save better. Otherwise there are good number of chance, that you do not have sufficient amount to invest at the middle or end of month.

Set aside funds for Emergency needs

Set up a liquid emergency fund in a bank FD or bank RD which can cover three to six months’ worth of costs.

As your expenses rise, make sure to keep it updated. Think of your emergency fund as an expense rather than an investment.

Emergency Fund-Why Should You Keep A Separate Emergency Fund

Buy term insurance plan 

It is a good practice to buy a term plan. The premium is quite low when you are young.

Buy maximum term till you financial dependent on you. It is best to buy disability rider and accidental benefit rider along with the plan or otherwise buy them as a standalone policy.

Read more about it

What Is Term Plan-Meaning, Risk Cover, Advantages & Details

Which LIC Term Plan Is Best

Buy Health insurance

If you’re single, choose a standalone health insurance plan for 5 lacs as your basic plan and maximise it with a super top-up plan.

Read more about health insurance plans

How To Decide Health Insurance Cover Amount?

Health Insurance-Which Is Better Family Floater Or Individual

How To Increase Health Cover Cost Effective Way

How To Decide Health Insurance Cover Amount?

Set Your investment amount

Next step is to fix your investment amount to achieve your goals. You can follow the 50:30:20 rule for this matter. As per this rule, spend 50% of earnings for your needs, 30% for your wants and 20% for savings.

However, if you can save more than this, even better. Perhaps a single person can also think about saving even more than 50% of their income.

Set up Asset Allocation

What is Asset Allocation?

 Set Up your equity to debt ratio and follow it for your present and future investments. One can invest in stocks and equity mutual funds for long term goals and maintain a good allocation in debt investments for any short term needs.

Plan your Retirement

For a young earner Retirement is far away thing and there is no time to think about this phase. But, Start investing for your retirement from your first pay cheque only. Even a small contribution towards this goal will reap better corpus in long run. I and sure, if you adopt this, you will feel proud at some time for your decision.Why Retirement Planning is important?

9 Super Easy Steps To Retirement Planning

Why Is Retirement Planning Important?

How To Plan Retirement Income In India

Best Retirement Pension Plans In India?

Portfolio Review

People invest money but do not review their investment portfolio. But, Portfolio review and regular monitoring of your investments is a MUST. In fact, this is the blood in the veins.

Continue to assess your portfolio at least once a year, and adjust your asset allocation to reflect significant life changes.

Stick to your Plan

Wealth creation is a long term phenomenon. Stick to your asset allocation for the long term. Don’t panic about the short term volatility in equity markets. Stick to your Financial Plan.

Read more Financial Planning -Objective,Features & Importance

Importance Of Financial Planning In Your Life?

Few more tips

• Check nomination in all your investments
• Pay off your loans faster
• Do not mix insurance with investments
• start investment early
• Increase your investments periodically.
• Consider inflation and taxation before investing in a product.
• Do not buy the product until you not understand it.
• Do not follow herd behaviour.
• Do not do panic selling. Instead follow your goal based investment
• Add passive income source to your kitty.

Top 10 Easy Financial Planning Rules for Beginners – BestInve …

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Today is well taken care of by our current occupation but what about tomorrow. Here Retirement Planning come into action.

For the sake of Retirement income people invest in pension plans, annuity plans or remain dependent on their PF and PPF only.

However, in more than 90% of instances, consumers underestimate their post-retirement costs. In most cases, people are unaware of how much corpus will be needed to cover post-retirement living expenditures, medical costs, and other travel, gifting, and incidental costs.

What is Retirement Planning?

Retirement planning for an individual is a specially designed Investment plan that helps to save for retirement years in a systematic and disciplined manner.

You can invest systematically on a monthly/quarterly/half yearly/yearly basis to accumulate the desired Retirement corpus.

Otherwise, you can also invest a lump sum amount whenever possible or you can invest lump sum amount along with SIP investment.

Because retirement planning is a unique customized plan, therefore, you can customize your contribution as per your cash flow.

For Retirement Planning you can choose from the wide variety of Investment options such as pension plans, annuity plans, post office saving plans, National pension Scheme, PF accumulation, Retirement corpus from job, rental income or interest income from fixed deposits.

Additional Reading:https://bestinvestindia.com/why-is-retirement-planning-important/

https://bestinvestindia.com/national-pension-scheme-nps-withdrawal-rules

https://bestinvestindia.com/7-effective-steps-to-financial-independence-retire-early-fire/

Why do you need Retirement Planning?

As the name ‘Retirement Planning’ is self explanatory in itself. Retirement Planning is needed to meet future expenses without any hassle.

There are multiple reasons why do you need Retirement Planning:

• To cover daily expenses in post retirement days
• Right estimation of future corpus required so to ensure smooth cash flow
• Meeting medical expenses which are not covered with regular Mediclaim policies
• To deal with inflation and other contingencies
• Above all, for mental satisfaction and peace because you are well planned

What is retirement planning process

Retirement planning process is simple and purpose is to accumulate a pre-decided Corpus which may fulfill your income needs in future.

https://drive.google.com/file/d/1l6muLsT9ZoloseAL9vOSvQQLN7k8Xa16/view?usp=sharing

Before understanding the retirement planning process it is necessary to understand what may be your future monthly expenses example say you are in your 30s and you are current monthly expenses are 50,000 and your retirement is 25 year away from now.

Your this monthly 50k expenses will be around 2.40 lacs per month after 25 years.

If you don’t know where you’re going, your chances of getting there are low. Retirement planning allows you to reach at your destination on time.

Mamta Khanna, CFPCM

Why so?

Imagine your life 25- 35 years back in time. Try to remember, what were your expenses at that time and what are your current expenses today. I am sure you will say, your expenses have increased significantly.

Or you might say, yeah!

The expenses have increased but, I have raised my standard of living and that is why expenses have increased.

Whatever may be the reason, whether it is inflation( rate of goods price increase) or you have raised your living standard. The expenses will increase with time.

History will repeat itself and your expenses are going to increase with time.

Steps of Retirement Planning

Step 1# Decide Your Retirement Age

Step 2 # Calculate your current monthly expenses

Step 3 # Calculate your future expenses considering inflation into account

Step 4 # Determine Retirement corpus required( Consider real rate of return)

Step 5 # Identify your other Retirement income sources

Step 6 # calculate the differential required

Step 7# Determine investment commitment on monthly or yearly basis

Step 8# Plan and create a ideal portfolio, if needed take professional help from a Certified Financial Planner

Step 9 # Track and Review your Retirement Plan on periodic basis

Here are some details for each step.

Step 1# Decide Your Retirement Age

The very first step is to decide when you wish to take retirement from your active job. People usually take retirement from their active jobs at the age of 60. But, there is no need to stick to this old stigma to retire at the age of 60. You can choose retirement age as per your own choice.

Now a days, people also choose an early retirement to pursue another carrier or follow their passion. To know more about Early Retirement Please watch the video.

Step 2 # Calculate your current monthly expenses

Before starting any kind of planning, it is necessary to estimate your current monthly expenses. For calculating monthly expenses, you can exclude your children expenses, EMIs, insurance premium, office going expenses etc.

Also in your post-retirement days, you may think about reducing your spending too. If you think in same way than you might deduct up to 20% of your expenses.

Step 3 # Calculate your future expenses considering inflation into account

The next step is to inflate your monthly expenses after taking inflation into account.

For example

Step 4 # Determine Retirement corpus required

You can assume your life expectancy based on your family history and your own health status. Now is the time to calculate your total post retirement expenses. For instance, for a 30 year old person who want to retire at 60, current monthly expenses are 50K.

Considering 6.5% inflation, he will require over 7 crore for 25 year long retirement. The other living expenses such as travelling, gifting and medical cost should be calculated separately.

Is this amount achievable?

The figure of 7 Cr looks too huge to achieve for a middle class person. But believe me, you can achieve and accumulate much more than this.

You will ask me how?

With the handholding of a Financial Planner and right planning you can definitely achieve this amount and live a blissful life. Financial Planning help you to set right asset allocation, product mix, access your risk profile, help you to manage your cash flow required to invest in a disciplined manner.

Step 5 # Identify your other Retirement income sources

Now you know your retirement corpus. But the work is not done yet. Now you need to find out your income from other sources like retirement benefits from you employment, Your PPF balance, Your PF balance, insurance policy maturity, if any and your other savings too.

Step 6 # calculate the differential required

,Find the differential of both and derive the net retirement corpus required. Otherwise you can reduce the monthly income required and re- calculate the required corpus.

Step 7# Determine investment commitment on monthly or yearly basis

On the basis of corpus required, you can determine your monthly or yearly investment amount.

Step 8# Plan and create a ideal portfolio

To save for retirement you can choose the product mix and set your asset allocation. You can choose to invest in equity and debt investment proportion. For equity allocation you can choose equity mutual funds and NPS, while for debt allocation you can consider your investment in PPF, PF, Insurance policies and your other savings.

Step 9 # Track and Review your Retirement Plan on periodic basis

The next step is to regular monitoring and reviewing the plan so that you remain on the track. In case of any issues with the investment type you can timely change your allocation or the investment itself.

Retirement Planning with Best Invest India

We at Best Invest India follow an in depth understanding of client’s profile, needs and requirements. Prepare a excel based Customized Retirement Plan.

Step 1: Understanding Clients’ Risk Profile

We provide a questionnaire to the client and ask them to fill the questionnaire. This helps us to understand their risk taking capacity based on behaviour and other factors. Thus enabling us to determine the right asset allocation for the client.

Step 2 : Assess The existing Investments

After understanding the risk profile of the client, it is necessary to review and analyze the existing investments, other savings and cashflow. The right investing pattern can be judged by the cashflow of the client. Existing investment review helps to eliminate the low paying investments which do not provide any monetary benefit to the client ( inflation factor taken into account).

Step 3 : Insurance Needs Calculations

We also calculate the insurance needs of the client so to safeguard their family. We recommend the client to buy pure risk cover plan i.e. term plan to get high life cover at relatively lower cost.

Step 4 : Portfolio Review and recommendations

The next step is to review the portfolio so to eliminate the low performing investments and suggest the right asset allocation as per the client’s risk profile and investment horizon. This review help to get more from the existing investments and also to reduce the risk component from the portfolio.

Step 5 : Retirement Plan

Finally Retirement Plan is created after reviewing your existing portfolio. This Retirement Plan is based at your inputs given at the beginning of the plan creation. Here, You need to answer few questions like:

• When I wish to take retirement?
• How long will I live?
• What are my present monthly expenses?
• What are my current investments for the purpose of retirement?
• Do I have enough contingency corpus?
• Do I have adequate life cover?
• Do I have sufficient Medical cover?
• Will I get income from any other source in my retirement days?

These questions and step by step guide to retirement Planning will help you to plan your retirement in a smooth way. If wish to take professional help, feel free to get in touch with us.

We are a Certified Financial Planner based firm.

You can schedule a call or write a email at info@bestinvestindia.com.

You may also call us on +91 8178594989.

Recently I came across a picture, which might answer the above queries -about what people think financial planner is and actually what Financial Planner is?

What people think – what a Financial Planner does?

People think that a Financial Planner only gives insurance and investment suggestions and manages investments.

What People don’t see – What does a Financial Planner do?

Although Financial Planning is quite an established concept but awareness of Financial Planning is still very low.

That is why, writing this post to make people understand the role of a Financial Planner in your life.

 Scenario Planning and plan B

Scenario planning is the planning of any kind of life important events in your life. Since each individual is different and has unique needs and requirements. 

Might be you need to invest a high amount today but due to your present responsibilities, low salary or any other obligations- you are not able to invest a high amount.

Here a financial planner’s role comes in handy for the investor.

She can guide on how he can pay later and meet his goal. She might give few suggestion based on calculations and experience.

 She also might suggest plan B too, where the planner can provide the alternative which suits the investor’s needs.

 Here, the ultimate goal is to achieve a Financial goal without taking too much risk.

 Net Worth Optimization 

Net worth is nothing but the sum total of  wealth you have. 

The formulae to calculate the net worth is

Net Worth = Asset – Liabilities

Now, the wealth you have, is going to remain the same at this juncture.

A Financial Planner cannot make a miracle and change/increase your net worth in a night span time.

But, definitely he/she can make better allocation of your assets so you can have maximum appreciation and benefit from your current assets.

He might suggest you to decrease or increase your money investment/ allocation in a particular asset.

Might be you have huge loans on one side and a good amount lying in your fixed deposit or bank account.

A Financial Planner can suggest you to make the changes and pay the loans, if required and hence one can save in lakhs by saving interest.

Cash Flow Planning & management

You might have good cashflow but at the end of month you might not able to save any good amount. Even after good salary packages the savings are very low.

Here, the financial planners’ role comes into action. The financial planner can make best use of positive cash flow and make better money management by exiting the low performing Investments.

Or if in case of negative cashflow corrective measures can be given which may alter the cashflow to positive note.

  Thus a Financial Planner can save good amount of money by optimizing Net worth( changing the asset allocation) secondly optimizing the best use of the cash flow and money management.

Life Goal Planning & Financial Health

Fulfilling money requirement at the required life is very important for anyone.

For instance, if your child require money for his higher education and you can shell out money comfortably. Such events are the most satisfying event for a parent.

Financial planners can help you to set smart financial goals and help you fulfilling life goals with the right planning at the right time.

If one is able to fulfil the financial goals and maintain a good financial health by maintaining contingencies, medical needs, insurance requirements and Investments.

Preparation for Life transition events

Life transition events comes in everyone’s life. The financial planner can also make provisions for life transition event make and changes the allocation of money so that one can have safe and secure cash flow without too much hassle.

Regular Review & Accountability Sessions

Planning only works when implemented fully and reviewed from time to time. It is the time when one can check the success rate of the planning and if required, the old decisions can be replaced by the newer ones.

This is not all. A much more elaborated planning work ( Below stated) also come in handy along with the above one when one appoints a Financial Planner. The planner job is also to provide the below mentioned services along with the above ones.

Retirement Planning, Education Planning, Estate Planning, Tax Planning, Investment Planning, Risk management are the part of Financial Plan.

In simple words, Financial Planning provides a road map to one’s financial life and makes provisions to fulfill Financial dreams in shortest possible time. 

Financial planning also helps you to define and understand your goals, quantify the goals ( in money terms)considering inflation and other important factors.

What is Financial Planning?

Financial Planning is Step by step approach to meet one’s life goals. It helps you to be in charge of your investment. 

It’s benefits can be understood from the client’s statement- that he wasted a lot of time earlier. He wished, he could have started it earlier.

Now, he feels relaxed and confident of achieving his goals confidently.

Financial Planning Importance

I wish I could send my daughter abroad to study but that might be very costly. Can I send her and afford her education cost with 2000  monthly Investments.

I have many insurance policies but I am not sure what amount I will get from these policies. Will I be able to live a comfortable and relaxed life once I get retired taking the maturity from these policies.

I have already invested in PPF/ PF, insurance policy and a piece of agricultural land.  Will I be able to pay my loans in 20 years? Is there a faster way I can repay my loans?

I’ll be getting a bonus in May this year, should I prepare my loan or invest this amount?

I wish I could afford a long vacation trip abroad. Will my accumulated Corpus be enough for me for my life?

These are not aspirations but you are goals, desires and dreams and I ( Mamta Khanna) as a CFP^CM can assure you confidently that your dreams and aspirations can be answered and achieved by financial planning.

The Planning benefits lies in fulfillment and achievement of these aspirations and goals confidently.

Why Financial planning?

I always say financial planning is required because you can’t go back in time and correct those investment mistakes.

As once the time gone never comes back. Similarly your hard earned ( Saved) money will give you better returns as it could have. 

If you come to know about the inadequacy of money when it is required most is very painful. Therefore it is better to have a financial plan in your hand.

Importance of financial planning

The importance of Financial planning lies in improving the Financial life of people

• Setting up SMART Financial Goals
• Building a safety net
• Make a Blueprint to achieve these life goals
• Eliminate useless investment
• Reviews the goal achievement periodically

In simple words Financial Planning tells a individual, how he can proceed further

• Where to reach
• How to reach
• Where you need to invest
• How much you need to invest
• How can you achieve your Financial life Goals
• The benefits does not end here, apart from all benefits it help you to maintain money for contingencies, reviews your life and medical insurance, make provisions to pay loan faster, reviews existing insurance, plan retirement etc.

Every second person is tensed over his investments. How are they performing? Does he need to do more, invest more but in lack of knowledge, research and time it becomes difficult to understand and comprehend the meaningless investment which might not give you good returns in long term.

Help you to build a safety net so that you do not lose on account of emergencies medical reasons and other calories if one is plant when he can live well

Financial Planning helps you in every aspect of your financial life from safety to money preservation to reducing loan faster to build wealth over a period of time. It also help you to realize your dreams in a shortest possible time. 

For example if I suggest a 35 year person with the salary of Rs 100000 per month to make a SIP of 70000 for month to have good retirement corpus than obviously it will be difficult for him.

But instead if I make a way for him to start a monthly investment with 20000 and increase the SIP on annual basis

or

Make a additional contribution each year or after six months.

This will reduce the pressure and anxiety for the person and help him to achieve his goals comfortably and confidently.

REMEMBER, One can reach his destination,

Only when he knows where to reach.

Start your Financial Planning Today itself.

Read more about Financial Planning

Contact us for Financial Planning needs – Contact Us

What is Financial Plan & How it works

A Financial Plan is 10-15 page excel based Financial Blueprint plan which caters the following aspects

• Your net worth calculations and how to improve/increase it over a period of time.
• Cashflow till working life
• Retirement Planning
• Child Education Planning
• Child/Your wedding Planning
• Goals Planning
• Investment Planning
• Tax Planning
• Estate Planning
• Insurance Analysis
• Loan Analysis
• Existing Investment Analysis
• Portfolio Review
• Overall Instruction summary
• Execution of Plan
• Periodic Review of Plan