What is Financial Planning?

Financial planning is a process of creating a framework for achieving your own life goals like education, marriage, retirement or vacation. This not only encourages saving and investing but also makes us mentally prepared for all possible shocks and surprises.

Financial planner


As per Financial Planning Standards Board of India “ Financial planning is the process that involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans”.

The FPSBs definition says it all. You should do your financial planning as soon as possible.

Consider the following points:

Through Financial Planning, you can better manage your income

If there is a financial plan in place, you know what long term and short term goals you should focus on. Hence, instead of expanding on unnecessary things, you’ll focus on what’s important. Further, the disposable income is limited. Hence, you’ll expand wisely.

Family comes first! And hence their security

Family security is perhaps the foundation stone of financial planning. For example, you’ll first invest for your family’s health and for the time when you won’t be earning – retirement!

You’ll invest wisely

When you are saving and investing for a particular goal, you’ll wisely and everything will be calculated. You’ll know how much to invest, where to invest and how to invest. For example, if you want to plan for retirement, and your current age is 25, then you know after how many years, you’ll be needing how much amount. Also, if you are knowledgeable enough in this area, then you can build your portfolio in such a way that the overall return is as per your requirement. However, you should consult a financial advisor.

No debt trap

Proper financial planning enables you to save and invest as per goal timeline. Hence, your goal is adjusted with your investments and timeline. Hence, at the goal completion ‘time’, you won’t be needing any extra amount.


No doubt referring to a financial advisor is a very good option to consider.

However, there are few things of day to day life that you can take care of all by yourself.

  1. Make your monthly budget and follow it strictly. Make the list of all possible expenses that you can incur in a month. Include even the major ones like rent. The basic idea behind this budget is that you’ll get an estimate of your necessary expenditure. What’s left after subtracting your expected expenses from income can be invested or saved.
  2. Build an Emergency Fund. You never know what situation you’ll be facing in near future. This is scarier if such scenarios imply draining you financially. Hence, if you lose your job, or a medical emergency arises, you should have enough to protect you financially. Emergency Fund is nothing but a safety cushion, to protect you in times of financial crisis. If you are self-employed then you should save an amount equal to at least six months of expense. However, if you are professional, save at least 3 months of expenses.
  3. Finish off with your debt (if any): Debt is no doubt an unnecessary headache. Give priority to it and pay over your EMI. Further, there are options to balance both EMI payments and SIP debits. For more options, contact Wealthcare Securities.
  4. Reduce your expenses: With monthly expenses being pre-planned, an emergency fund in place to provide you with a safety cushion against financial crisis like situations, you’ll notice that your unnecessary expenses are being reduced.

Hence, by adopting these small steps and making these a habit, you can definitely end up lowering your expenses and saving some to invest for your short and long-term goals.


If experts are to be believed, you shouldn’t do your own financial planning. Reasons are numerous. First and the foremost reason being, when it comes money, we face conflicting ideas fuelled by our emotions. Hence logic takes a backseat.

However, if you want to try and give it a shot, you should consider the following points:

  1. Identify your goals and segregate them on the basis of their tenure, i.e., long and short term. For example, your vacation plan after two years becomes your short-term goal and your retirement becomes your long-term goal.
  2. Prioritize your goals. This arises from the fact that means to accomplish our goals are limited but the wants are of course unlimited. So you need to prioritize.
  3. Assess your risk appetite. Perhaps the most difficult one, assessing your risk appetite is where it is suggested you shouldn’t do your financial planning yourself. The risk-return chaos leads you to think to what extent you could bear a loss. However, if data is to be believed, more than 90% fail here.
  4. Asset Allocation. Once you have zeroed down to your risk appetite, you can decide keeping in mind the duration of your goals, how much amount you’ll be investing and where – equity, debt or hybrid.
  5. Look for mutual fund schemes. You can look for the best performing schemes. However, if you don’t have an idea about this, consult a financial adviser or Certified Financial Planner.
  6. Constantly review your plan. Once you have to build your investment plan and made all the investments, your job is not done. You have to constantly review your plan and be up to date with the market.

Final Word

As far as financial planning is concerned, no doubt venturing into new horizons and doing it yourself is not a bad idea. However, there are certain limits to it. The problem is, people think less logically when it comes to their money. They are emotionally attached to it. So, when it comes to financial planning, most of the DIYs fail. Most of those who have done their financial planning on their own have either ended up spending extravagantly (read: more than required) or have skipped one or two important things, like insurance or perhaps retirement! Hence, it is any day preferable to look for Certified Financial Planners, even though you have enough knowledge about investment.

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