What are the Tips for Personal Financial Planning?


Personal financial planning is the roadmap to the financial strategies for maintaining the financial health and accomplishes the financial goals. Today, in this post, we will discuss the tips for personal financial planning & the right approach to do the financial planning properly?

Everyone has few objectives in his life and I have listed a few examples of these goals are as follows:

•  Few are looking for the home.

•  Few are looking for the marriage of their children.
  
•  Few are looking for the education of their children.

To achieve these goals, proper planning of finance is required to meet the requirement of life and complete the objectives of life as per the decided target.

In this post, we will discuss the few tips to do the proper financial planning.


What are the Tips for Personal Financial Planning


Rules of Personal Financial Planning

There are two main rules of personal financial planning.

•  The first rule is 50:30:20. It means, 50% of your income should go towards your regular expenses like the household, 30% for your vacations, traveling, food etc. The remaining 20% would be your savings only.

•  The 2nd rule of personal financing is to pay yourself.

The formula is Income-savings = expenditure.
Make a target of saving and plan your expenditures accordingly.

 Process of Financial Planning

There are several steps involved in financial planning and we have listed all these steps below. These steps are the key tips of doing financial planning in the best manner.

•  The first step is to identify your financial condition. What are the assets and liabilities that you carry? It will help you in doing your financial planning in a proper manner.

•  Identify your goals. This is the second steps of your financial planning. Divide your goals into the short-term and long-term goals. If the duration of your goal is up to 5 years, consider it short-term goals. Any goal with duration of more than 5 years would be considered into the long-term goals.



Tips for Personal Financial Planning


•  The 3rd step is the formation of your financial plan. In the previous step, you have decided your objectives and in the same step, you also got the information related to the amount required to meet your financial goals.

•  The 4th step of financial planning is to implement the plan.  There are several options available and among all the options, few financial components are useful for everyone. I have made the list of these components below.

•  Timely review your financial plan and the implementation of the financial plan. If any deviation occurs, modify your plans accordingly.

Must have financial components of every individual

The personal financial planning of any person can be divided into parts. First part is insurance and the second part is the investment. Make your investment separate from your insurance and it is one of the main steps of personal financial planning.  

In this post, we will discuss the insurance part only and read our other post on investment.

  • Term Insurance

Term Insurance has become the need of all those persons where his entire family is dependent upon him. Life is uncertain, and anything could be happened while traveling on the road. So, it is our recommendation to take the term insurance to support your family when you were not with them. It is a type of life insurance offered by the insurance company which offers the financial coverage to the policyholder for a specific period.  If any mis-happening happens to the insured person during the policy term, the insurance company will pay the amount of insurance to the beneficiaries of the family. Among all the life insurance, Term Insurance provides the maximum return at the lowest premium during the period of the plan. It will help your family to meet the financial requirement in your absence and make them financially independent.



Tips for Personal Financial Planning


  • Health Insurance

 Conclusion


In the post, we have discussed the insurance product that is the first tip of doing proper financial planning. In the next few posts, we will discuss the investment and the components in which we can invest to get maximum returns at the retirement.

Thanks for reading our article. Kindly share your feedback in the comment box



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