What it takes to make a good financial plan

Financial Awareness and Financial Planning

PNB MetLife 29-09-2016 11:56:38 AM
Financial-Awareness-and-Financial-Planning

The peace of mind that comes with having a safe financial backup is one of the best. But for effective financial stability, individuals are required to be prudent and calculative in their expenses and investments. A recent survey pointed out that young individuals such as newly working professionals are less aware of financial risks and opportunities. They are limited to a vague overview of the current financial scene and lack the direction or the expertise when it comes to taking effective financial decisions. This lack of financial awareness is to be addressed at the earliest. Here are a few things that are to be kept in mind that will prove to be handy in the future:

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Insurance is a safety net. It is a contingency plan that will be helpful when life puts you in a spot. While it is certainly necessary, health and life insurances should not be subscribed to, only till the required extent.

Emergency Funds are always a nice escape route to have in case things get rough financially. If it doesn’t, you can always re-route it into your next priority. Keeping your current financial strength and standard of living in mind, build towards at least 3, 6, or 12 months of normal living expenses.

Retirement Planning is crucial for a safe and stress free old age. It is important to note that during retirement, income falls without a corresponding fall in expenditure. Hence it is important that you make ample use of Provident Funds, Superannuation Funds, pension schemes, etc. to provide for this phase in life.

Housing requires significant investment. Purchasing a house is in everyone’s financial plans. It would be advisable to look out for ideal home loans too while opting for your own house. Keep an eye out for interest rate fluctuations and take expert advice to predict said fluctuations to make best use of dips in interest rates.

Investments are the best way to ensure the safe keeping of your savings, and also to increase them while you’re at it. There are multiple avenues for investment today, such as Mutual Funds, Stocks and Bonds, Unit Linked Insurance Plans (ULIP), etc. ULIP plans are a good mix of investment and insurance, making it suitable for younger individuals who are looking to start up a new savings scheme.

The importance of financial planning cannot be stressed enough in today’s world for sustainable living. It is of utmost importance to stay on top of the finance game so as to ensure that your financial needs are met in the long run.