The world of personal finance is simple, but it looks complicated. Every person is doing personal finance unknowingly. The proper way of planning and organization the personal finance would help to save and grow the money. In this section, we are going to discuss on investment in personal finance.
The longer I go on, the more I am aware of the power of finance – Justin Welby
Initially we said “Personal Finance” being done by each and every person in the world. For example spending 50 rupees to have tea at Chai Point or coffee at Cafe coffee day involves personal financing. Personal finance involves from earning to spending, Saving to investing,PF to retirement plan.
Here analyse for 10 min with below question and know your personal finance status.
Financial position: Your net worth (your household assets minus your household liabilities) and your household cash flow (your expected yearly income minus your expected yearly expenses).
Emergency Fund: An understanding of how a household can be protected in event of an emergency such as natural disasters or layoff in organization. At least emergency fund should be 5 month expenses.
Tax Planning: Lowering tax costs through tax reduction programs. Understand Indian tax system 80 deduction. First try to understand it. You can save at least 50 thousand rupees if you understand tax planning.
Investment and Accumulation Goals: Planning and investing for financial goals, whether it is for a new house or to have a certain amount of profit from stocks, mutual funds.
Retirement Planning: Planning for your or your families’ retirement, knowing that you are going to be financially secure enough to retire at the time that you want to do so.
Insurance : Take one term policy which covers till your age 100 for your family. It would not take monthly more than 2000 rupees to cover 1 crores. It is good to take term policy. Kindly take one term policy now itself. Start now. It is worth taking term insurance policy.
An example of personal finance is knowing how to budget, balance a checkbook, obtain funds for major purchases, save for retirement, plan for taxes, purchase insurance and make investments.
An example of personal finance is if you sit down with your spouse and plan out your spending including kid’s school fees, monthly expenses.
Now we are know about personal finance. Now action plan on personal finance. Let us write our personal finance status after all the personal and survival expenses.
Financial position : Home worth of 50 lakhs + 2 lakhs cash flow.
Emergency Fund : 1.5 Lakhs rupees in bank account for emergency such as medical or natural disaster or layoff.
Tax planning : 1.2 lakhs in 80C( LIC permium + term insurance + ELSS mutual fund). Still have to plan for 30000 rupees in 80C
Retirement planning : Monthly 5K in Equity mutual fund or persion plan for 20 years.
Money for Son’s higher education : Monthly 4K in equity mutual fund for 15 years.
Money for daughter’s marriage : Monthly 4K in equity mutual fund for 15 years.
Family Vacation plan : Monthly 3k in debt mutual fund for 3 years.
Insurance : 1500 rupees in term policy (cover of 1 Crore).
There is investment plan for student to dean, professional to business owner, Housewife to rulers of the nation. Next section will discuss on investment and investment stretegies for everyone.
Share your personal financial plan with us to learn us from your plan. Happy planning.
“At the end of the day, if you’re wasting your time by not investing in yourself, you’re going to waste away—and that would be the greatest waste of all.”