GOAL BASED FINANCIAL PLANNING
If you fail to plan, you are planning to fail!
– Benjamin Franklin
What is Financial Planning?
Financial planning in the context we are discussing today means:
- Planning to finance a life goal i.e. generating enough money to fund your life goal.
- Some examples of life goals: Retirement, child’s education, child’s marriage, buying a house, funding a charity, generating money to start a business, buying a big ticket item like car, around the world tour with the family. Etc…
- Contingency planning is also part of this exercise. Some of the examples include loss of life of the bread winner in the family, loss of job, loss of property in fire/earthquake/theft etc…
- Once the goals are identified you need a plan to finance that goal.
Why do you need a Financial Plan?
- Be aware of your assets and liabilities all the time.
- Know ways that can maximize your investments.
- To know how long will your money last once you retire from your job.
- Are there ways to save income tax.
- Know things you can afford and things you should avoid buying. Learn to live a lifestyle that matches your financial position.
- To know how you are doing in life (financially) and gain peace of mind.
- Let a professional manage your progress to life goals and you focus on spending quality time with your family.
- Be ready for unexpected events in life.
Steps involved in Financial Planning
- A financial planner like me will fix an appointment with you when you solicit a financial plan. If you are married you should be present with your spouse for this meeting.
- In the scheduled meeting the I will be asking you lot of questions about our income, expenses, current assets, life goals and your risk taking appetite i.e. gather information about your current financial health. Success of a financial planning depends on how truthful you are in this meeting about your financial health. Click here to see a generic template that I use to start the conversation. The template is just the starting point as each client will have few more specifics that needs probing.
- I as a financial planner will then analyze the data this is homework time for me. I would need to evaluate all inputs that were discussed in our first meting and come up with the plan. I often come across some unrealistic goals being wished by clients. This is the time for me to see if they can even fit into the scheme of things with the current income.
- I will call you to fix up an appointment with you and present you with a plan to manage your financial goals. This is a very crucial meeting you should pay full attention to the plan presented. Click here to see a sample financial plan.
- Once I have discussed the overall plan. I will also propose solutions(the implementation plan). This will be advise on specific financial products that you need to invest in to meet your financial goals.
- A plan needs regular visit. I will schedule a review meeting once a year to explain how are you progressing with respect to your plans. This is also an opportunity for me to suggest ways to keep pln on track. E.g. reduce investments if your goals have been met or shift to a different investment scheme if there is a better plan available.
NOTE: I provide this service FREE of cost without any risk or warranties. I am not an independent advisor as I am an authorized agent of LIC of India and a sub-broker of all leading Mutual Funds. There are fee based independent planners in the business as well. Choose one that you can trust, you will need to discuss your financial status truthfully with this person. A fee based planner should be independent one proof of independence is fee based planner will not recommend any particular agent or institution for buying the product. If you are indulging with a fee based planner make sure not to buy from the person/institution that is recommended. It is a common fraudulent practice these days for fee based advisor to have a side business in someone else's name.
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