Guide to financial planning

Written By Unknown on Senin, 02 Februari 2015 | 18.00

Financial planning is not a put off. It is an easy to understand and essential part of your life. Give some time to learn and you start a wonderful journey to financial freedom.

FINANCIAL PLANNING. If that word is a put off, don't let it be. It's the all important word in your money dictionary. Here, we simplify it for you.

Step 1 - Put your finances in order
We spend more than half our lives working and saving, but hardly spend any time planning on how to put that hard-earned money to work more effectively. So, how do you plan your financial life?

Put your (financial) house in order
Financial planning starts with a review of your overall financial profile, and not at investing. Before rushing to build an investment portfolio, you need to address the following issues:

Insure your health, life and assets
Start by protecting your family's current lifestyle against events/ expenses beyond your control. Buy appropriate insurance policies for your medical expenses, life, car, and other important assets.


Calculate: How much insurance you should buy

Repay high-cost loans

Paying credit card bills on time can save you more money in interest costs than most of your investments could earn you. Ditto for borrowings that cost you more than 15% pa. So, put high-cost loans behind you, and only then start building your investment portfolio.

Put money aside for emergencies

Deploy some money in short-term investments that can be encashed on demand to help you tide over unforeseen needs and emergencies.

Draw up a savings plan
Income - Expenditure = Savings

Do not leave this equation to chance. Make a savings plan. Put away as much as you can, as regularly as you can, aim to save at least 15% of your take home annual income.

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