How to Achieve Life Goals Through Financial Planning – Forbes Advisor INDIA


Financial planning is the key to financial independence which provides greater security for the future. It has both immediate and long term benefits and hence it is important to keep modifying it as you go through the different stages of life. This can be achieved by calculating liabilities and assets and deploying investment strategies, allowing people to pay more attention to their spending to contribute to financial stability.

A well-designed financial plan also promotes efficient tax management and incorporates insurance and welfare provisions. This approach can ensure that all major expenses are well managed and that you don’t have to depend on others, financially.

Key aspects of financial planning

Financial planning has three important aspects:

  1. Protection: will focus on effectively protecting your wealth against emergencies using instruments such as insurance.

2. Investment: will focus on investment for capital appreciation.

3. Credit: will integrate strategies for planning key purchases with credit solutions.

This highlights that money can either be kept for financial protection, invested for capital appreciation, or deployed in credit solutions for different expenses. As you grow older, your approach to financial goals will vary depending on how your income grows and your risk appetite.

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

Let’s dig deeper into each segment:

Financial planning for young professionals

Young working professionals die from college and seek opportunities to fulfill their dreams and fulfill their responsibilities. Some of them are also the first job seekers.

These professionals should budget and aim to stick to it. At this point, their appetite for investment is low. The youth pool is filled with the zest to excel and has a great appetite for credit to achieve its aspirations. Their needs may include higher education and renting an apartment of their choice. They opt for credit solutions to build up assets over time.

Likewise, they also choose to protect their assets and benefit from insurance plans. They should seek to acquire the knowledge and be made aware of the different aspects of financial planning so that they can start early.

Financial planning for middle-aged professionals

Middle aged professionals are the working class with almost a decade of experience. This segment intends to invest to the maximum and channel more funds for family and lifestyle expenses. They always build assets with a mix of credit and investment possibilities. These goals can be achieved by having a diversified portfolio. Some of the most common large expenses they focus on include owning a home, planning for their children’s future, and retirement.

Credit can play a key role in effectively meeting some of their essential expenses. This will allow them to set aside money each month through Installments (EMI) to achieve their dreams and save a portion of their salary for early retirement through investments such as those linked to the market. Protecting wealth will continue to be a priority to preserve the financial situation and it makes sense to set aside an emergency fund for any unforeseen circumstances.

Financial planning for seasoned professionals

This class of professionals are wiser, more experienced, and approaching retirement age. These people have a weak appetite for risk taking and are committed to protecting their assets. Even if their focus on credit will decrease, ideally they should have a succession plan and put it in place. A well-balanced investment plan will be helpful in reinvesting investment returns to increase the retirement corpus.

Steps to start financial planning

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

At a young age, managing your money with good planning can pave the way for good financial practices. Introducing credit solutions into your portfolio is a good step in building 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 which can help save money. Therefore, it is always a good idea to start early and shape your investments as you move forward in your life.

After you’ve worked out the nuances of financial planning, here are some tips on how to better manage the credit elements 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 assess financial needs accordingly. Their needs can be assessed by examining the type of family context such as business, neutral family, distribution of expenses among family members. Set your financial goals like buying assets, raising kids, or saving for medical emergencies. This analysis coupled with a disciplined financial management approach will help achieve balanced financial planning and avoid over-indebtedness.

A contingent fund is always a blessing in the face of a financial crash. An emergency fund is established by setting aside a fixed amount each month that is not intended for investment. For example, a sudden job loss or an unforeseen medical emergency can seriously disrupt finances. In such scenarios, it makes sense to keep an amount equal to 6 months’ salary as a contingency fund. Existing IMEs can be repaid with this fund so that defaults do not erode your credit scores.

The key to a comprehensive financial plan is to assess the risk-return model. Many times we take more credit than we need. You have to make timely payments and be aware of the debts that a default entails. Use credit cards wisely and always avoid defaults as they can lead to unnecessary chargebacks. Take advantage of the personalization of credit offers adapted to the borrower’s repayment capacity. Choose a balanced mix of secured and unsecured loans for the right credit strategy.

  • Check your credit reports every now and then

Regular credit payments increase credit scores. It is therefore advantageous to have good credit exposure. It is advisable to check credit reports and scores at regular intervals, be aware of contributions and have an error-free report. A continuous audit practice will improve the quality of financial decisions and permeate a healthy credit life cycle.

  • Securing a healthy credit life cycle for lucrative solutions

Many credit cards and loan facilities can be a debt trap if not monitored carefully. It’s a well-known principle to borrow only what you need. Any excess arrangement of money will only impair credit capacity and add more burden to the borrower to repay. A clear credit history will lead to a good credit rating, also creating a factor of trust in the lender and allowing easier access to loans at a lower interest rate.

Financial goals change at every stage of life. With the advancement of technology, one can have great control and discipline in financial planning. Such measures can help ensure the sustainability of individuals and improve the financial situation. Financial stability simply involves reaching your financial goals without compromising your savings and with a few simple and timely steps anyone can live a healthy life.

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