Financial Planning

We do financial planning to get financial freedom. Financial freedom is when you’ve enough capital that you can overcome any financial problem.

Following are steps for financial planning:

1. Mediclaim Policies: In our life, there may be number of times that we might get seriously sick, seriously injured, meet with an accident, become hospitalized etc. We need to plan this financial problem before it hits us. Therefore we buy a mediclaim policy. Nowadays hospital bills come not in thousands but in lacs. So we need to be prepared not only for us but also for our entire family. We all should make a  family mediclaim policy that covers (You, your spouse, mother, father, kids).
2. Life Insurance: Yes everyone of us die ultimately, so why not leave something behind for our beloved ones. When I say life insurance I only mean a pure term plan, people often mix insurance with investment. That’s not correct, In a term plan, you pay a very little premium and on your death, your family gets a very big return. (for example: a 23 year old person can buy a 30 lacs term plan in just 6 thousand rupees. (I'm an insurance agent at LIC, I recommend to go with LIC because claim settlement with LIC comes to around 99%, yes it is more costly then any other company but you're assured that your family gets the claim after you're gone. Call me now 9860002486)
3. Corpus or Liquid Money: Life is complicated, sometimes it makes us happy, sometimes sad, whatever be the case, we need cash in hand to overcome (for example: you need a latest smartphone in the market to make things smoother in your business) or (for example: at your home your TV suddenly stops working, so you need to replace it within a week, as nowadays no can live without entertainment). Therefore we need to have liquid cash in our bank accounts to fulfill these types of need. This money can be a form of Fixed deposits which gives you better interest rates then by just keeping it inside a bank account.
4. Tax Saving: Everyone of us work to earn income, but the Government put taxes on our income too, so it time to invest in 80c plans but not more than 1.5 lacs:
1. Life Insurance
2. Elss Mutual Funds
3. PPF
4. PF
5. Investment: If you’ve done above all steps, you’re now financially secure, few more carefully examined steps and you’ll get financial freedom. Investment means put your money on to work to make more money, it never means gambling. To learn the skill of investment you first need to be financially literate, financial literacy is not taught in schools or colleges. Before you enter the big world of investment, you need to first learn about your own life style, you need to learn about yourself.
1. How much do you earn monthly?
2. How much are your expenses?
3. Are all expenses necessary?
4. Are you frugal or lavish, when it comes to spending money?
if you can answer above questions, you know how much is left in your pocket for investment. Now, you need to make goals before you make an investment, goals such as (I need 50 lacs in 10 years for my new house or I need 3 lacs for new car within 2 years), Goals help you to get focused. Focus gives you answers.