“Money is like a sixth sense without which you cannot make a complete use of the other five”, said a wise gentleman.
He couldn’t be more precise in summing up the role of money in a largely-capitalist society of today which runs on finance, banking, profits and revenues. The present economic gloom, then, would force any individual to ponder, ‘what could have gone so wrong?’ One prominent (and, indeed, recurring) refrain to that would be corporate greed. Well, I say, it wasn’t greed. It was, instead, careless profit-making of the investment firms.
What is needed is ‘planning’ and ‘control systems’.
Financial planning is no longer a vanilla term. Its a veritable real need of today. And, lately, investors, big as well as small, have acknowledged that. It is also a need that applies to businesses as well as individuals. But it is still viewed as something which demands technical skill and academic know-how. This is a fallacious belief that stymies ‘personal financial planning’.
So even you thought that financial planning is the domain of CFPs (Certified Financial Planners)? Well, it might be their forte but you don’t necessarily need to hire one. It really depends on your profession, income, exposure to capital-markets etc. For instance, if you run a business which needs guidance and expert advice on tax planning, you might want to consult an expert. But, for any average individual, the fact remains that financial planning by oneself is utmost necessary.
How do you manage your finances? Have you planned enough for your future needs? Have you accounted for the future needs of your growing family? Is your investment portfolio balanced in its exposure to risk? OR, do you even have an investment portfolio?.. these questions are vital for you to manage your expenses and incomes.
If you want to sample how financial planning can make a difference, you might want to read about ‘Lalitha Booth’. Only, when she allocated all her assets toward attaining education and empowerment, did she become the mini-celebrity that she is today. She can certainly advise you on how to live your life (courtesy her inspiring life-story and struggles) and how to manage your finances (because she’s a true expert and a Harvard scholar on this! ). She also epitomises the fact that ‘personal financial planning’ is something that every individual is capable of.
Firstly, you can use methods like financial planning calculators to gauge your position in the financial landscape but don’t be a stickler! The key is to ensure that whatever financial planning you carry out, it should be BALANCED-in its outlook, behaviour and exposure to risk.
Fish out tips and information on ‘tax planning’ and you will be amazed at the amount that you could save in your annual tax file. Determine how much of your income is fixed/assured/ steady income and how much is irregular income. Accordingly, allocate and channel a portion of your steady income towards investment.
Make effort and do explore the various avenues where you could ‘INVEST AND GROW’ your money. Stocks and bonds are just a few mentionables here. Do understand that your choice of ‘investment options’ would depend on your appetite for risk. As a general rule, it is advisable for individuals to have a balanced portfolio by investing in- fixed deposits, saving accounts, fixed maturity deposits, some equity etc. Mutual funds can come to your aid if you really aren’t sure how to proceed on investing in equity.
At the same time, also do insure yourself and your family, your assets and your properties. Insurance might take some money out of your monthly income but it is a sure-shot method to cover against the possibility of a huge loss from an unforeseen calamity in the future.
You can start financial planning now if you haven’t really considered it till now. And, yes, you can start it yourself at your own home. All the best!