It
is an exercise of estimating our financial needs as also ways to meet them
during the entire life cycle, e.g., birth of child, education, purchasing house,
marriage, purchasing seeds, etc., or to meet emergency situations like illness,
accident, death, natural calamities like food, drought, etc.
‘ Why
should we do Financial Planning?
Financial
planning enables us to plan in advance our likely expenses keeping in mind our
level of income. Thus it helps in two ways, one- we can save regularly a
portion of our income for meeting future needs and two- we can cut down
expenses on non essential items with a view to save for future needs. So we
should start financial planning today so that we are in a better position to
pay off our debt and build savings to buy a house or finance higher education
with our own money. Attain your goals
with financial planning.
‘ How
to do Financial Planning?
j
Assess current financial position (Where are we today). Identify our
financial needs - [(What do we want
to achieve in short term (1 Year), medium term (1-5 years) and long term (more
than 5 years)]
k
Estimate the cost of each item and the date we want to achieve it. Calculate how much we need to save each week/month.
l
Maintain a financial diary - Write down weekly/monthly income and expenses.
m
Curb expenses- spend sensibly.
n
Review savings regularly-Whether it is as per plan? If not, look at 4expenses for opportunity areas to cut back spending
and increase savings.
o
Determine the amount saved at the end of each week/month.
p
Deposit savings in a bank account.
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