A financial plan is usually thought of as a conscious attempt to put your money life in order by ensuring that youright. However, your money life is about a lot more than just your . In fact, in order to get to the right , you must focus on some other parts of your money life.
The way you will approach this will depend on how financially secure you already are. A financial plan for someone who is just starting out with organising their money matters can be substantially different say, from someone who already has accumulated wealth. Nevertheless, both need to focus on comprehensive planning rather than just.
If you are just starting out
There is a lot more to be done when you are just starting out. Firstly, you must have adequate health insurance cover to take care of those large, unforeseen, medical expenses that can sneak up on you. Secondly, if you have dependents, think of protecting their interests by getting aplan for a policy amount that matches the loss of financial stability in case of your untimely death. These are two contingencies that can now be taken care of even if you don’t have significant savings or long term .
Investing is a midway step in your financial plan, focus on it only after the starting safety nets have been rightly tied up.
Next, set up a fund that can be funded to take care of other emergencies like job loss or disability.
Yourplan will fall through if the above is not done first, that’s why a comprehensive financial plan is important.
For example, say you don’t have medical insurance and thanks to a car accident, you and your family members are hospitalised for a considerable period. No one could have foreseen this incident and nor can you control the outcome; hospitalisation expenses without an insurance plan will eat into long term, thereby, messing up the plan you had.
Lastly, make sure you aren’t in the stranglehold of bank loans with heavy EMIs to repay.
is a midway step in your financial plan, focus on it only after the starting safety nets have been rightly tied up.
If you have enough accumulated wealth
Let’s say you not only have all the safety nets in place but also there is a pile ofyou are already sitting on. Can you now just focus on an exclusive plan? You could, but the danger is, by doing that you will end up making choices based solely on the expected return. However, the promise of high return, especially in a short period, also comes with high risk.
The latest, the next PMS or AIF idea, the venture fund that everyone else is in, doesn’t have to be your choice too. You may want to diversify your , but it is also important to keep the selection simple so that risk is not escalated and more importantly, risk matches your own life’s circumstances. Just because you have a good amount of savings in place, doesn’t mean you should put the rest, at risk.
As your wealth grows, your lifestyle will change too. Along with accounting for that in your insurance policies and in your, you have to consider that a potentially growing family size will also be catered to with your existing .
Life dynamics are such that you cannot considerin isolation. Always keep at least one eye on the other aspects of your financial life before taking a plunge into .