The More Money Less Stress Approach to Personal Finance Planning
We have searched the Internet, and looked at a lot of books to assemble the finest advice on Personal Finance Planning.
Here you'll find a simple, common sense approach to Financial Planning that is easy to use and remember.
Obviously, we call it the 'More Money, Less Stress' Approach to Personal Finance Planning.
Types of Financial Planning
There are essentially 4 main areas of financial planning - Insurance, Investment, Retirement, and Estate and Succession Planning. The second and the investment portion of retirement planning are covered by us but the others are not. We suggest you to consult a financial planner for insurance planning or a lawyer for estate and succession planning.
1. Insurance Planning
: This protects you and your family from extreme financial hardship in an event of any misfortune. As your life situation changes (e.g. when you get married, your children get older etc), it is worthwhile to revisit your insurance plan, just to be sure that it covers the additional needs in your life.
2. Investment Planning
: This is the proper allocation of your excess cash and savings in the right investment instruments to help you achieve various goals in life, such as buying a house, starting a family, college education of your children, and so on. The typical investment instruments which Indians use are equities, mutual funds, property, public provident fund, insurance and fixed-interest products.
3. Retirement Planning
: Provident Fund (PF) alone is not enough for retirement because a large part of it would have been used for the providing life's important things like the purchase of a house, children's education and marriage. Inflation also eats up the real purchasing power of your PF savings. Retirement planning involves projecting income growth, estimating the returns of certain investment instruments, planning the amount required to maintain a certain lifestyle after retirement, and so on. This is to be sure that your lifestyle will not suffer greatly once your income stops.
4. Estate and Succession
Planning : This involves the allocation of your assets, and how you wish to have them transferred or allocated to other parties. Wills, trusts, gifts and other means of estate dutiable items are analysed. Lawyers and accountants typically feature greatly in these plans.
Next : Objective of Financial Planning