What is financial planning?
It is a step-by-step guide towards the short and long term goals of an individual or entity. A plan is nothing but a guide that answers all of our questions about how, what, when, and where. A financial plan is a roadmap that includes the assessment of the current situation, and detailed information about the developments in the time to come. If you are applying for Vijaya Bank personal loan, one must check all the essential details.
It mitigates the uncertainty that stands in the way of the financial journey by defining the decision moves that will lead to a better understanding of how to do things. It will lay down a budget that should be followed, including the revenue sources and the anticipated expenses. The savings and investment will also be a part of it.
The thumb rules of financial planning that one must adapt.
Financial planning may sound like a complicated and challenging task, especially for the layperson, but one must consider that it is not as complicated as it has been portrayed.
The rules, if followed diligently, will be of great help for the individuals or entities deriving the plan. Some thumb rules might come in handy for the beginners as well as the ones who are well-acquainted with this area.
These rules have been brought to the attention of the individuals and entities by the Economics Times. These will also help you keep yourself from taking a personal loan, even if it is being offered at a low interest rateT.
Save first, spend later. This rule will go a long way for all, irrespective of their income level. It is highly essential to save a certain percentage of income and must expand the remaining for meeting the requirements.
They must analyze the savings amount and its implication on tax. Some investments may help you to save tax as well. The savings must increase with the increase in income level.
Maintain a reserve for contingency. Emergency funds must be set in place to be prepared for any unforeseen urgent situation or expenses that might not have been accounted for.
Getting a prudent life-cover (insurance). It should be cost-effective, and at the same time, it should serve your purpose.
Retirement planning should be a part of the long term financial planning, but no one must omit.
Saving is not enough. The money kept idle in the locker should be cautiously invested based on requirement and the risk appetite.
The points mentioned and discussed above are significant when it comes to forming and implementing the financial plan.
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