Empower Your Yearly Budget With This Must-Have Financial Plan

Do you ever feel overwhelmed by your expenses, or does your budget plan empower you? If you fall into the former category, we’ve got your back!

According to the PGIM India Mutual Fund Retirement Readiness Survey 2023, urban Indians invest and save less and generally spend 59% of their income to meet their current expenses despising a stable future.

While investing majority of your income in the present may help you lead a lavish life, it may lead you to debt if an emergency arrives! Hence, there’s no better time to start following an expert-curated budget plan than today! So here it is- Your guide to financial planning.

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What is Financial Planning?

Financial planning involves analysing your income and expenses and devising a plan to achieve your financial goals. 

Let us help you examine an ideal financial plan that may ensure financial stability for your future while addressing all your present needs & wants.

1. Start with a Financial Health Check

Whether it is your first time creating discipline between your income and expenditures or you are starting off after a while, quickly assessing your current financial situation is crucial to build a long-term monetary plan.

Therefore, you must carefully jott down your incomes, assets, investments, expenses, liabilities, and debt in one place before devising a foolproof budget plan.

2. Set Tangible Financial Goals

Once you have successfully assessed your financial capacity, start setting realistic financial goals that align with your budget. 

Suppose, if you plan to purchase a car within two years, send your child to higher education in five years, and save some funds for a peaceful retirement, set tangible short-term, mid-term and long-term goals and invest accordingly to meet these goals. 

3. Abide by the 50-30-20 Rule for a Foolproof Budget

In her book, "All Your Worth: The Ultimate Lifetime Money Plan", Elizabeth Warren popularized the 50-20-30 budget rule. In this rule, you split up your after-tax income into three parts: 50% of which goes to the undeniable needs, 30% to your desirable wants, and the remaining 20% goes to your savings. 

Here’s a bifurcated explanation of the 50-30-20 rule.

50%-Needs

Needs are the bills that you are obligated to pay regularly. Your house rent, groceries, insurance preimum, tution fee, etc. may count in as your Needs. You may devise atleast 50% of your income to these kind of expenses.

30%-Wants

Wants may classify as the things that you might want to spend on but aren’t absolutely essential. Upgrading to the latest iPhone-16 when you have a sound version, buying branded accessories that you might not use very often, or paying for a concert can be a few things that you may spend on from this 30% of your after-tax income.

20%-Savings

Savings are one of the most crucial aspect of a foolproof financial plan as it helps you meet your set financial goals. Your investments in the fixed deposits, and other stable assets can be counted as your savings. You must allocate atleast 20% of your net income to your savings.

4. Have an Emergency Plan 

You must have atleast three months of savings parked for unprecedented emergencies. Whether it is market volatility, a medical emergency, or an unplanned event in your family, an emergency may always come unannounced. Therefore, having certain funds saved in advance can ensure your financial plan is not derailed when the exigency arises. 

5. Beware of Fradulent Financial Gurus

A mentor may help you create a successful financial plan and hiring one becomes crucial if you are planning to build a secondary income by boosting your investment game. However, you must be watchful when hiring a financial advisor. Always verify the certifications, past projects, and portfolio of your prospect financial advisors and then choose the most relevant individual who aligns with your goals.

6. Initiate Your Investment Journey With Low-Risk Investment Plans

Once you have categorised your income and savings, it is time to invest your savings to cultivate long-term benefits. However, for the start, we would suggest that you start by investing in areas that have lower-risks and a steady growth rate. 

Suppose, if you have devised ₹20,000 to your savings, allocate ₹10,000 to a recurring deposit while you may invest the rest amount in multiple, stable Systematic Investment Plans. 

We hope this guide will help you in devising a basic financial plan for the coming year!

Do you have any other questions stopping you from following a budget plan? If yes, write to us and plan for a stable financial future today!

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Till next time...

Stay Safe and Stay Healthy!

Team Care Health