How To Achieve Life’s Goals Via Financial Planning – Forbes Advisor INDIA


Financial planning is the key to financial independence that ensures greater security for the future. It has both immediate and long-term benefits and therefore, it is important to keep altering it as one crosses the different life stages. This can be achieved by calculating the liabilities and assets and deploying investment strategies, enabling people to be more careful of their spending to aid financial stability.

A well-crafted financial plan also promotes efficient tax management and incorporates provisions for insurance and well-being. This approach can ensure that all the major expenses are well-managed and you do not have to depend on others, financially.

Key Aspects of Financial Planning

There are three important aspects to financial planning:

  1. Protection: will focus on effectively safeguarding your wealth against emergencies using instruments like insurance.

2. Investment: will focus on investing it for capital appreciation.

3. Credit: will factor in the strategies to plan the key purchases with credit solutions.

This underlines that money can either be preserved for financial protection, invested for capital appreciation, or deployed in credit solutions for different expenses. As you grow, your approach to financial goals will vary with your changing income and risk appetite.

At the beginning of the professional journey, you may want to focus more on credit options for meeting prominent life goals. With a growing professional career, you accumulate more wealth and plan for investments for better returns. At this point, credit exposure also grows as people seek credit support for home loans, family planning, etc. As life stages evolve, tenures of credit solutions may come to an end and people may seek better returns for their investments to plan retirement. It is important to tailor your financial planning to fulfill each of the three roles.

Let us deliver more into each segment:

Financial Planning for Young Professionals

The young working professionals pass out of college and scouts for opportunities to realize their dreams as well as fulfill their responsibilities. Some of them are first job-seekers too.

Such professionals should draw a budget and aim to stick to it. At this stage, their investment appetite is low. The young pool is filled with the zest to excel and hold a high credit appetite to attain their aspirations. Their needs may include higher education and renting an apartment of their choice. They opt for credit solutions to build assets, over time.

Similarly, they also choose wealth protection and avail insurance schemes. They should look at gaining appropriate knowledge and awareness about different financial planning aspects to be able to start early.

Financial Planning for Middle-Aged Professionals

The middle-aged professionals are the working class with nearly a decade of experience. This segment intends to invest maximum and channel more funds for family and lifestyle expenses. They are still building assets with a mix of credit and investment avenues. These objectives can be achieved by having a diversified portfolio. Some of the most common big-ticket expenses that they are focused on includes owning a house, planning the future of their children and retirement.

Credit can play a key role in efficiently meeting some of their essential expenses. It will allow them to park aside some money each month via facilities (EMI) to fulfill their dreams and save a part of their salary for an early retirement via investments such as those that are market-linked. Protection of wealth will continue to be a prime focus for safeguarding financial standing and it is smart to set aside an emergency fund for any unforeseen situations.

Financial Planning for Senior Professionals

This class of professionals is wiser, experienced and nearing the age of retirement. These individuals have a low risk-taking appetite and are keen on wealth protection. Although their focus on credit will reduce, they should ideally have a succession plan and will set it in place. A well-rounded investment plan will be helpful to re-invest the investment returns for increasing the retirement corpus.

Steps to Start Financial Planning

Important financial decisions made early have a long-term effect in shaping financial stability. Time management is an important factor in financial planning as it governs capital appreciation. For both credit and investment routes, time is of essence when planning financial milestones. For example, age-oriented goals such as family planning, retirement planning, etc. can be better met with systematic planning.

At a young age, managing money with the right planning can pave the way for good financial practices. Introducing credit solutions to your portfolio is a good step to build a credit footprint that can have a lasting impact. As credit scores can be improved with some smart credit choices, one can avail loans at competitive rates, and this can aid savings. Therefore, it is always smart to start early and shape up your investments as you progress in your life.

Having elaborated on the nuances of financial planning, here are some tips for better managing the credit components of a portfolio as good credit practices can attract better credit from lenders:

  • Understand your financial needs and be disciplined

It is important to anticipate income growth and chalk out financial needs accordingly. One can evaluate their needs by looking at the kind of family background such as business, neutral family, division of expenses amongst family members. Chalk out your financial goals like buying assets, children’s education or saving for medical emergencies. This analysis coupled will a disciplined money management approach will help achieve balanced financial planning and prevent overleveraging credit.

A contingent fund is always a blessing when faced with a financial accident. An emergency fund is made by setting aside a fixed amount every month that is not directed towards investments. For example, a sudden job loss or an unexpected medical emergency can disrupt finances considerably. In such scenarios, it is wise to keep an amount equal to 6 months’ salary as a contingency fund. Existing EMIs can be paid off with this fund so that any defaults do not erode your credit scores.

The key to a full proof financial plan is to assess the risk-return model. Many times, one takes on more credit than required. One should make timely payments and be aware of the debts that a default entails. Use credit cards wisely and always avoid defaults as they can attract unnecessary chargebacks. Make the most of the customizations available in credit offerings that are tailored as per the borrower’s repayment capacity. Choose a balanced mix of secured and unsecured loans for the right credit strategy.

  • Check your credit reports from time to time

Regular credit payments increase credit scores. So, it pays to have a healthy credit exposure. It is advisable to check credit reports and scores at intervals, to be aware of the dues and to have an error-free report. A practice of continuously checking will improve the quality of financial decisions and imbibe a healthy credit lifecycle.

  • Ensure a healthy credit lifecycle for lucrative solutions

Multiple credit cards and loan facilities can be a debt trap if not watched carefully. It is a known principle to borrow only as much as you need. Any excess arrangement of money will just tamper the credit capacity and add more burden for the borrower to repay. Clear credit history will lead to a good credit score, creating a trust factor in the lender as well and enabling easier access to loans at a lower interest rate.

Financial goals evolve at every juncture of life. With the advancement of technology, one can have great control and exercise discipline in financial planning. Such measures can help in future-proofing individuals and improve financing standing. Financial stability simply implies fulfilling your financial goals without compromising on your savings and with some simple and timely steps, everyone can live a wholesome life.