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Financial Planning

  1. What is Financial Planning?

Financial planning is the process of assessing financial goals of an individual, taking an inventory of the money and other assets which the person has, determine life goals and then take necessary steps to achieve goals in the stipulated period. It is a method of quantifying a person’s requirement in terms of money.

 Life Goals can include buying a home, saving for your child’s education, marriage, planning for Retirement etc.

 It is a process where a person can plan in such a way that he tries to meet all expenses / commitments on schedule without being dependent on anyone till the end. Financial Planning is important because it can make your life easier.

Financial Planning will answer three important questions:

  1. What are your Financial Goals?
  2. Where are you today in relation to your goals?
  3. How will you get from where you are today to your goals?   

 Financial planning also includes the foll:

 a)      Risk Management including Health Insurance.

b)      Investment Planning.

c)      Tax Planning.

Retirement Planning & Estate Planning.

2. Why Financial Planning?

Financial Planning gives you more clarity in life; it provides direction and meaning to your financial decision. It helps to understand how each financial decision affects the other areas of one’s finances.  It helps you to provide right balance between your present and future lifestyle.

 Financial Planning has become important these days because of the following reasons :

 a)      The concept of Joint Family is dying fast. We have to take care of ourselves in the current nuclear family system, which can be done only if we plan properly.

 b)      Life has become so unpredictable. Diseases, Accidents, Terror, etc., can strike anyone anywhere. Even a small appendix operation could lead you to spend minimum Rs.20000/- in a small hospital.

 c)      With Inflation rising every year, one needs to plan proper investments so that the returns help in meeting the requirements of the Financial Goals duly taking care of inflation.

 d)     With proper Financial Planning, one can meet the requirements of Emergency requirements as well.

 Regular financial planning can help give you peace of mind


The major things to be considered in Financial Planning are :


v  Financial Goals

v  Time horizon to achieve these Goals

v  Inflation to be considered.

v  Risk tolerance level of the individual.


Keeping these in mind, Financial Planning is done using a six step process.


  1. Self assessment of client.
  2. Identification of Personal Goals.
  3. Identification of financial issues, problems & opportunities.
  4. Arrive at recommendations & solutions.
  5. Implement the right strategy.
  6. Review & update periodically.