Financial Planning

Financial planning is the procedure of developing a personal roadmap for the financial well being of the investor.

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Below are the inputs of the process of financial planning:

  • The finances of the investor, i.e. the income of the investor, liabilities, and his/her assets

  • The risk appetite of the investor

  • The goals of the investor, i.e. his/her future and current financial requirements

The output of this process is investor’s plan of personal finance that tells him/her how to use his/her money to achieve his/her goals, real returns, keeping inflation in mind, and taxes.

Resultantly, financial planning is the procedure of the systematic planning of the finances towards attaining his/her life goals whether it is short-term or long-term.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Objective of Financial Planning

  • To Ensure the Availability of Funds: The financial planning is a procedure of fund generation and making that fund available at the time of the requirement of the investor. This planning as well includes fund estimation that is needed to solve different purposes that are requirements of working capital and long term assets.

  • To Generate the Capital Structure: The capital structure majorly consists of the company's capital, which is, the proportion and kind of the capital that is needed in any business. This structure contains debt-equity ratio planning for both long and short-term.

  • Time and Source of Fund Estimation: Time is one of the game-changers for any business. It is essential to deliver the right fund at the right place at the right time. It is as important as the amount's generation itself. On one hand where time is a crucial factor the source from where these funds come from are also necessary.

  • Avoiding the Not So Necessary Funds: An important objective of every company is to ensure that it does not raise any unnecessary resources. Shortage of firm and fund are unable to meet the obligations of the payment. On the other hand with extra funds, the firm becomes unable to earn the returns instead adds the costs.

Importance of Financial Planning

Financial planning is something that defines the targets of a company, its techniques, policies, budget plans, and projects in respect of the financial activities that last for the long term. In this way, with financial planning, the company guarantees satisfactory and viable policies for financial investment. The importance of financial planning is as follows:

  • It guarantees adequate funds.

  • Guarantees fund’s providers to effortlessly put the resources into the company that provokes financial planning.

  • The financial planning helps to ensure harmony between the incoming and outgoing of assets with the goal with which the stability is kept up.

  • This planning also supports the expansion and development programmers that support the long-run organization’s substances.

  • The financial planning also helps to diminish the vulnerabilities that can work as a support in the development of the company. This aids to provide a guarantee of benefits and security of the company.

  • The planning also decreases the chances of vulnerabilities if an organization wants to change the pattern of its business sector. Moreover, the organization will be in better condition to confront this situation effortlessly with the help of enough funds.

Financial Planning for Beginners

Financial planning is a procedure wherein one gets his/her financial framework for achieving his/her life goals in a very planned and systematic way. The beginners should focus on the below points while making a financial plan:

  • Manage money

  • Regulate their expenses wisely

  • Manage and maintain a personal balance sheet

  • Deal with extra cash judiciously

  • Planning well for retirement

  • Make a personal portfolio of investment

  • Wisely manage the debts

  • Get risk coverage

  • Planning the taxes

  • Planning the estate

If one is unaware of where he/she should start from, then it is suggested to take advice from some reliable source. It is good to even start investing in mutual funds and for getting the benefits of professional fund management and diversification benefits. To invest in mutual funds is hassle-free.

Financial Planning Process

The financial planning process that one should follow to achieve his/her financial goals is as follows:

  • Step 1: Understanding the Current Financial Situation: Those who want to start financial planning must understand his/her present financial situation. It is suggested to understand the source of income, assets, debt, liabilities, etc. It provides a clear picture of one’s current financial situation.

  • Step 2: Understand the Goals: Every member of the family must list down the current and future goals of the family. After understanding the goal, it is suggested to prioritize every goal by taking the consensus of all the members of the family and keep a period for each. For example, when will the family needs finances to achieve these goals, if required, quantify every goal. By doing this exercise one will be able to recognize the short and long term goals and the money one may require for each.

  • Step 3: Know the Financial Gaps: Once a person understands where he/she stands financially, and where he/she or his/her family wants it to be, he/she will be able to know the financial gaps.

  • Step 4: Make Personal Financial Plan: After understanding the financial status, goals, and gaps, it is time to make some personal financial plan. For the same, it is suggested to review different options of investment like mutual funds, stocks, PPF, fixed deposits, binds, etc and get to know which instrument or combination of any of these best suits the requirements. However, it is to be remembered that the timeframe of the investment should correspond with your period's goal.

  • Step 5: Time to Implement the Financial Plan: It is time to put all things into action. For the same, it is needed to gather all the required documents, open the required Demat, bank or trading account, get connected with the broker and get things started.

  • Step 6: Review the Plan with Time: Planning finances is not an activity of one-time rather it is an on-going process. The success of any plan is possible only when one sticks to his/her plan and reviews that plan with time. So, the final step is to check the financial planning periodically.

Advantages of Financial Planning

Mentioned below is the list of benefits of financial planning:

  • The financial planning helps to maintain a good balance between expenses and income.

  • The plan helps to take care of the cash flow and hence reduces the unwanted expenditure.

  • Helps in creating corpus and improve savings.

  • For maximizing the investment returns.

  • For reducing the tax liability.

  • The plan also creates wealth and makes sure that one is having better wealth management for achieving life goals.

  • The financial planning reviews various insurance requirements of an individual or organization and makes sure that the dependant is secured financially against unfortunate events such as disability or death.

  • Ensures a financially secure post retirement life.

  • Last but not least, this also makes sure that the will of the dependent is made.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply


  • What is financial planning?

    Financial planning is a process through which one can achieve his/her future financial goals without much hassle. It manages the finances of a person properly. The main objective of financial planning is to make sure that the correct amount is available in the correct hands at the right time in the future for achieving the life goals of a person.
  • What does a financial planner do?

    A financial planner is a person who makes use of the financial planning process to determine the life goals of a person. The key role of a financial planner is to help people to recognize their financial planning requirements, their current priorities, and the investment products that are utmostly suitable for meeting their requirements. In this way, a financial planner possesses a complete understanding of a wide range of tools for financial planning and financial planning products, however, his/her primary responsibility is to help the clients to select the product for every requirement.
  • What is the requirement of financial planning?

    Financial planning offers meaning and direction to the financial decisions of a person. It enables a person to understand how every financial decision he/she makes affects the other financial areas. To understand this let us take an example, purchasing some particular product can significantly help one to save adequately for his/her children's future or children's higher education. In this way, by following financial planning one can easily adapt his/her major life changes.
  • What should be the qualities of a financial planner?

    A financial planner works for a person or a firm. The basic quality of a financial planner should be to be loyal to his/her client but not to the investment products.
  • What does financial planning include?

    A financial planning includes reviews and understands a person’s net worth, his/her financial objectives and goals, cash flow, his/her investment portfolio, retirement planning, investments, insurance requirements of a person, and his/her tax planning.

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