5 steps for Financial Planning

There’s no optimum time to start planning your personal

finances.

The best time to start is now!

This presentation will help you organize your finances

for a better future.

5 steps for financial planning

The 1st step to start with is to plan a budget for yourself. An

easy segmentation that can be looked at, are as follows:

• Essential Spending (Necessary for survival)

• Discretionary Spending (You can do without these)

• Savings

Make allocations for each segment and do stick to it; no

matter what!

Plan your budget

• Setting up goals is necessary to initiate the process

of achieving them.

• Create a spreadsheet & divide the goals into 2 parts:

• Long Term Goals like buying a house

• Short Term Goals like a foreign vacation

next summer

• Short-term goals should always be planned on your

discretionary spending

• Mantra: Can your short-term spending be delayed?

If yes, then definitely delay it.

Set your goals

• It helps to have a sound knowledge of financial

jargons like compounding, taxation &

diversification

• Websites like Investopedia are great for learning

about investment & personal finance jargons

• This will allow you a stronger understanding of

personal finance and make wiser investments.

• For wealth creation ideas & knowledge updates, you

can subscribe to the ithought blog.

Get acquainted with the financial world

• Your cash lying in your account actually

depreciate in value over time.

• Proper asset allocation can help you grow

your wealth.

• Variety of instruments are available to grow

your wealth with various risk profiles. Some of

them are Equities, Bonds, FDs/RDs, Gold, Real

Estate, etc.

• Every asset class has a cycle. The selection of

asset classes & timing the market cycle is

important

Know your assets

• Tax planning is important. If it’s difficult

planning all by yourself, consult a professional

tax consultant.

• He can help you plan your investments to lower

your tax bill & save you from paying unnecessary

taxes.

• Plan your taxes at the beginning of the financial

year, instead of the end. This gives more

opportunities to invest & save taxes. Investments

like equities & mutual funds give long-term tax-

free returns.

• Saving the cost of a tax consultant can in

turn, result in a costlier tax bill.

Plan your taxes

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