Financial Planning, as the name suggest is today’s topic of the blog. Today we will learn how financial resources can be utilised in such a manner that we don’t have to worry in future about finances. We earn money and spend on daily or say monthly expenditures of ours, be it household expenses or travelling expenses. Expenditures are fixed and we have to bear them, that’s why we earn, so that we can run a family. There are many expenses which we have to add after marriage or say after a baby comes to the family.

When we have to raise a family, we have to think about present expenses and future expenses too and save for it too. Let’s say if a person has to save for his son’s higher education, then how much he should save monthly so that at certain period, when he needs the money, a good corpus should be available to him. This is called financial planning. When we plan for our future. There are many financial experts who will provide you with details about it, but according to my personal experience one should start saving from an early age. The habit of saving money is good for all. At least 20% of the earnings should be saved for future.

You might be wandering how financial planning is related to happiness. Yes, It is, when we are financially secure, it gives us peace of mind and it becomes reason to be happy. Now a days, people like to invest their money in shares, mutual funds, Bitcoins. These instruments of investment have market risk involve in it as you may or may not get the required return after investment, but they give good returns in long run. If you can stay invested for long term then these will fetch you good return on your investments. Now the question arise, how to evaluate, how much money is required or how to plan our finances so that our old age expenses, higher studies of our child and other expenses of future would be met with the returns on investments? The answer to this question will be different in each case. As it depends upon how much one earns, in which field his child wants to persue his career, lifestyle of the person. All these factors affects financial planning.

When we plan our finances systematically, we will have peace of mind in future and at present also feel pleased and say to ourselves that yes I have done a right thing to save money for my future. Though future is unpredictable, but we have to be also ready for any and every emergency, for that we must have emergency fund. We must enjoy life, go for vacations, have party, see movies, etc. and at the same time save money wisely for the future too. Always opt for health insurance and live a healthy lifestyle too. When you are more cautious about your health, you save so much money which might be spent on medical bills.

Start investing small amount of money from an early age, this will not only built a healthy habit of saving but also helps in forming a good corpus for future. Try not to use credit card or use it occasionally. Be it business or job, a fixed monthly income should be divided into

1. Household expenses.

2. Medical expenses

3. Travelling expenses

4. Food and entertainment expenses

5. Savings

6. Emergency fund

7. Education fund.

Always think about saving before spending. Teach this healthy habit of saving to your children too, how? Buy them a piggy bank and tell them to save their money in it. On their birthday, open the piggy bank and deposit that money, collected by them in their bank account.

They will feel more than happy to see the financial transaction done by them in bank at so early age. It will not only teach them how to save money but also make them future ready to deal with banking system. On every special day, be it birthday, annivarsary etc. invest, be it a small investment, investments will earn you returns.

These small steps taken by us in present will fetch us optimum amount in future. Financial planning will give you sense of satisfaction, security, happiness too. Plan your finances according to your future needs.

Ramneet Kaur