DIY Financial Plan

Whenever we talk about personal financial plans, most people think it is quite hard to manage your money and they should hire a financial planner. Having a financial planner is good but again not everyone can afford the financial planner and thus they have to fall back to do financial planning of their own. I am also doing my personal financial plan independently even though I can afford the financial planner. Because while doing it on my own, I am learning too.

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Financial planning is actually simple, people make it complicated. Now the thing is, a financial plan is personal and it differs from individual to individual. So let's go through one sample financial plan and how you can update it to make it as per your own. This is because the financial plan depends on your risk appetite, on your financial situation and as per your financial situation.

Let's take an example, you have saved 20% of your salary and you have Rs 10K to save. I am assuming that you are just starting and you don't have any previous investments, no savings and no insurance. In that case, your financial plan should be:

1. Life Insurance of Rs 1K
2. Health Insurance of Rs 1K
3. FD of Rs 2K
4. Mutual Fund of Rs 4K across 2 to 3 categories
5. NPS or PPF - Rs 2K

So the first 2 categories is for your health and life to insure you which is very much required because in that way your financial plan is complete. The problem as of now is that medical costs are increasing rapidly and having a insurance is must. Your life also matters to your family and if anything happens to you then your family needs security and that comes only with the insurance.

The FD is to grow your emergency fund. If any emergencies come then this fund actually helps you to sail through that emergency. Mutual fund is to grow your wealth and in the long run it can help you in your retirement. National Pension Scheme or Public Provident Fund is from the government and can easily fetch good interest and can help you in your retirement by giving a fixed income.

This is the basic financial plan and thus you can change the values according to your investment money. Also, keep in mind that you have to increase your savings by 10% every year, so if you are investing Rs 10K today then next year you should invest Rs 11K. Happy Investing

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