Financial planning refers to the process of making the changes needed to take care of both current and future funding needs, taking into account household income, expenses, assets, and debt. The purpose of financial planning is to provide the household with sufficient income or resources to meet current and future expenses and needs.

Financial planning is a lifelong process. Which does not happen in a day, a month or even a year. You just have to be more focused and disciplined in walking on the roadmap lead down by a Financial Plan.

What is portrayed in a Financial Plan?

# Why do we invest? - Identify the financial goals in life

# Where to invest? - Identify the best financial tools and instruments

# How much to invest? - The monthly amount required for investment.

Let's understand how you can start financial planning with the help of these questions:

Do you know your income and expenditure budget ?: Identifying all your sources of income and listing all your monthly expenses is the first step in financial planning. After this step, it becomes easy to make a statement of income and expenditure. After this analysis look at where you are spending unnecessarily and how you can increase your source of income. This statement helps you determine if you are saving enough to build the corpus you need considering your current income and expenses.
Do you know what your assets are as of the date and the liabilities/debts you have? : The next step after the income statement is to prepare the net worth statements. Identify/write down your liquid assets (both equity and debt) as well as real estate and gold. Write down your current debt arrears. A net worth statement helps you understand your financial status today and what% of your wealth is in each asset class. This statement helps us to know the wealth we have created so far from our savings and also shows how we can make the best use of it to meet our financial goals..
Do you know the purpose of your investment process? This is the most important part of the financial planning process. You need to know the financial goals for which you want to invest. Given the rate of inflation, you need to know the future value of the goals and time required for each of your goals.
Do you have adequate insurance cover to meet the needs of your family in case of your untimely demise ?: You need to take adequate life insurance before you start investing. So make sure you have adequate term insurance according to your earning, family structure, and responsibility you have on your shoulder before investing.
Do you have adequate health insurance of your own without employer health insurance? - Have a separate family floater or standalone health insurance policies for family members so that you and your family will be covered by health insurance other than employer health insurance if you lose your job.
Have you set aside enough emergency funds? - Emergency funds come in handy in cases like loss of a job for some reason, sudden loss of income, sudden financial liability or temporary loss of income due to temporary disability. This fund should be sufficient to cover the cost of six months / one year monthly expenses including all EMIs for the employed person and one to one and half years for the self-employed person.
Have you started investing according to your life goals? - Once your financial goals have been set and the funds required for it have been calculated, start investing the monthly amount required to achieve those funds. When investing for long term goals, keep investing without taking into account market fluctuations.
Do you regularly review your financial decisions? Financial planning is a dynamic process that does not end when you make a specific investment. You need to evaluate your financial decisions regularly. More evaluation may be needed if personal, social, and economic factors get changed. When life events affect your financial needs, this financial planning process is able to adapt to those changes and make the necessary changes. Regularly reviewing financial decisions helps you to make changes to your priorities. The review helps you align with your current financial goals and your current life situation.

The processes discussed above are the important steps of Financial Planning:

Financial planning is the process that best manages the personal financial situation of your home. It primarily serves by identifying the main economic objectives and formulating action plans to finance those objectives. It is a holistic approach that

reviews current economic conditions,
assesses future needs,
outlines the required course of action
processes to meet current and future needs..