2. Agenda
• Life Aspirations Overview
• Roadblocks
• Financial Planning: A scientific solution
• Contents of a plan: Sample Financial Plan walkthrough
• Benefits
• Process
• How Financial Planning has helped
4. You wish you could…
Own a
luxurious
home
Get your kids
educated in the best
schools
Enjoy vacations
at exotic places
Save
sufficiently for
ceremonies
Buy a big
car
Leave a rich
legacy behind
Retire early and
enjoy your
hobbies
Live your post
retirement life as
you live today
5. But the reality is…
Definitely won’t get
a good bonus
EMI for present
home loan has
become never
ending
All professional
colleges have
increased their
fees
High credit
card bills
Meager salary
raise this year,
forget promotion
Even a minor heart
ailment can set you
back by over a lakh
rupees
Lost so much of
savings in the last
market crash
7. You think…
• Having more money will solve my financial worries
• I know where my money goes so why do I need a
budget
8. You think…
• I have been investing in PPF, NSC and FDs only as I
don’t want to take risk
• I am an aggressive investor I trade in equities only
9. You think…
• I have 8 insurance policies, I am fully covered
• I buy an insurance policies every year to save tax
10. You think…
• I have been investing in PPF, NSC and FDs only as I
don’t want to take risk
• I am an aggressive investor I trade in equities only
11. You feel…
• Let’s enjoy my life today, saving can be started later on as I
have a long earning life ahead
• Loan is a convenient way of buying things you cannot afford
today
12. Why…
• My friend had made a lot of investments but
When he met an accident his family had to borrow money
from their relatives
15. What is it?
Where do you want to
reach tomorrow?
Where you are today? How do you plan your journey?
16. What is it?
Financial Planning is a dynamic process of meeting your life
goals through proper management of your finances
17. Contents of a plan: Sample financial plan
walkthrough
18. Contents
• Current situation summary
• Goal and Gap analysis
• Execution plan and action items
• Observations and recommendations: cash adequacy for goals, investments,
insurance, assets and loans
• Situation analysis and projections: snapshots of income, expenses, insurance,
investments, loans, Net worth, saving patterns
• Cash flows: current and projections
20. Benefits
Comprehensive Financial Planning instills greater confidence in you
by:
• Presenting ‘The Big Picture’ of your financial situation by
analyzing every aspect of your personal finance and thereby
identifying the gaps
• Evaluating both favorable and unfavorable future scenarios
and adequately preparing you to deal with them
• Equipping you with the financial roadmap and simple
actionables
1. Bad news here! Increase in income does not solve any problem. Money problems are a symptom. It probably can be handled by breaking entrenched patterns of spending, handling finances, mindsets etc. A new job giving more money, is not the solution.
1.Your income has increased 3 times in the last 6 years, have your savings also increased by 3 times
2. Yesterday you bought 500 rs. Shirt now 1500 rs., earlier you had a maruti 800 now you want honda civic but does it hold true for savings also?
You living expenses or standard of living has increased but what about my financial safety net (Building a financial safety net to prevent financial disasters caused by catastrophic illnesses or other personal tragedies. And saving Choosing and following a course toward long-term financial goals such as buying a house, sending your kids to college, or retiring comfortably. )
So it should be rather Expenses= Income – savings and not the other way round.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------1. Budgeting (all companies prepare income-expenses sheet then why not you)
1. Impulsive buying
To those of you who think you know where your money goes without keeping detailed records, I issue this challenge: keep track of every rupee you spend for one month. I promise you'll be surprised and perhaps shocked by how much some of your "small" expenditures add up to.
Controlling your financial affairs requires a budget. For many people, the word "budget" has a negative connotation. Instead of thinking of a budget as financial handcuffs, think of it as a means to achieve financial success.
Whether you make thousands of dollars a year or hundreds of thousands of dollars a year, a budget is the first and most important step you can take towards putting your money to work for you instead of being controlled by it and forever falling short of your financial goals.
Credit card allows you to spend more than you can afford and keeping multiple cards makes you loose track of total debt accumulating and if some starts rolling over then you are caught
Credit card debt is a major problem in this country. While not everyone has a credit card, those that do typically carry a balance. The interest rate on a credit card balance is usually between over 40% APR. These high interest rates make it difficult for people to pay down their debt -- especially if only making the minimum payment. In fact, just making minimum payments can make even the smallest balance over a decade to pay off and thousands of dollars in finance charges. It’s no wonder getting out of debt seems so hard.
While this payment strategy will help you get out of debt, you can potentially make things go even faster with a few other tips. First, call your credit card company and ask about getting your rate lowered. This won’t always work, but if you have been on time with your payments and a decent credit score, they may be willing to work with you. It doesn’t hurt to try and it doesn’t cost anything. The worst they can do is say no.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Having some investments and insurance does not mean your goals are going to be met. It needs to be properly validated if what you are currently having and what you are continuing to do is sufficient. Also, whether what you are doing is aligned to your long-term requirements also needs to be validated. If they are not, the ones that are taking you on a tangent needs to be discontinued and new ones put in it’s place.
