Transform your Financial Life

Transform your Financial Life

15 Oct 2018

Prioritize the use of your time and money with the help of a new approach called Financial Life Planning. It is true that you will not discuss things like travelling around the world or playing a guitar in a band with your financial planner. Life planning is a way of pursuing your dreams that you otherwise thought were impossible to fulfill or could be pursued only in later years. Goals such as house buying, saving for retirement, children’s education and marriage are greatly emphasized by traditional financial planners. It intends to help you pursue a life that you always desired, be it a career change, doing community work or spending more time with your children. A perfect financial plan is important to determine your short-term and long-term financial goals. It also protects your overall financial activities, thus ensuring stability and profitability.

Financial life planning goes beyond mere statistics or numbers and is therefore a more comprehensive approach. However, not all clients might be receptive to this idea purely on account of the time, energy and costs thus involved. We all know that life planning is more fulfilling, but the costs to clients are on the higher side. Life planning is more time consuming and thus people who practice this on a full time basis have to work with fewer clients. The planner has to pay the cost of certification and an annual license fee to the authority or the institute which has granted him the license. This approach is for anyone and everyone who wants to live a more fulfilling life using the funds they have at their disposal. India certainly needs more well-qualified and professional financial advisors to help the common investors manage their wealth. Life planning can help them better than traditional financial planning.

What is Financial Planning?

Financial Planning is basically the process of meeting your financial life goals through an astute management of your finances. This process involves gathering the relevant financial information, setting comprehensive life goals, examining your current financial position and devising a strategy or plan as to how you can meet your goals, given your current situation and future plans.

A perfect financial plan is important to determine your short-term and long-term financial goals. Life goals can include buying a house, saving for your child's higher education & marriage or planning for retirement. It also protects your overall financial activities, thus ensuring stability and profitability.There is no perfect plan but a few key aspects would help in perfect financial planning and building a customised one according to your needs and risk profile. Let us examine these in greater detail below:-

  • Goal Setting - Check your risk tolerance and try to fix your goals based on specific time horizons. Short-term goals may include the reduction of your tax liabilities. A medium-term goal may be to buy property. Long-term goals may entail saving for your children’s higher education or marriage. Determine your financial ambitions. This will help you pick the right investment products.
  • Plan for Protection first -Protect the two most valuable things you have first—Protect your life & protect your health; you can then invest to build wealth for the long term. Buying adequate health and life insurance is a must and it is equally important to scale up the protection as your liabilities increase. Insurance is not an investment. It protects your health and the financial future of your family. The thumb rule is to buy a combination of policies. The life cover should be atleast 10 times your annual income.

Key Benefits of Financial Planning

Financial Planning provides a direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you pay off your mortgage earlier or it may delay your retirement significantly. By viewing each financial decision as a part of the whole, you can consider its short-term and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on the right track.

Can you do your own Financial Planning?

Some personal finance websites, magazines or self-help books can help you do your own Financial Planning. However, it would always be advisable to seek help from a professional Financial Planner if:-

  • You need expertise that you don't necessarily possess in certain areas of your finances. For example, a planner can help you evaluate the level of risk in your investment portfolio or adjust your retirement plan due to changing family circumstances.
  • You want to get a professional opinion about the financial plan which you have developed yourself.
  • You have an immediate need or unexpected life event such as a birth, inheritance or a major illness
  • You feel that a professional advisor could help you considerably improve upon how you are currently managing your finances
  • You know that you need to improve your current financial situation but don't know where to start.

If you were to follow the aforesaid simple thumb rules, you are well on your way to developing a comprehensive financial plan which is customized to suit your specific life goals and also adequately keeps your risk profile or risk tolerance level in mind.

Happy Financial Planning and May you achieve the best results!

Founded in 2005 by new–age entrepreneur Abhishek Bansal, the Abans Group has evolved into a globally diversified conglomerate, providing expertise in Broking Services, Non-Banking Financial Dealings, Financial Services, Agri-Commodity Services, Warehousing, Realty & Infrastructure, Gold Dore Refinery & Manufacturing, Trading in Metal Products, Pharmaceuticals, Software Development & Wealth Management. The Group is a comprehensive financial and non-financial services and solutions provider, aiming to provide end-to-end solutions to its clients.