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10 must-follow rules of financial planning

100 rupee indian note

“Instead of working for money, let money work for you.”

Yes, we want to plan better, save more, become wealthy. But, we often excuse ourselves by believing that we aren’t financial planners, and this number game is beyond us. Well, this ain’t true at all.

Follow these 10 mantras for successful financial planning..

  1. Ideal allocation of your income: 30 % of your income must be used for monthly living expenses, 30% of your income must be used for liabilities repayments, if any, 30% of your income must be saved and invested for your future living, 10% of your income must be spared for entertainment and vacations.
  2. 6 month’s expenses must be available for Emergency Fund (should be invested in Liquid Fund, FD, etc.)
  3. Home loan must be registered and applied on both, the husband’s and wife’s name (both can get tax benefits on home loans)
  4. Regularly check the nominations for all financial instruments, if no nominee exists then do it now
  5. Note that only in insurance policies, claims are payable to the nominee. In other financial instruments, ‘legal heirs certificate‘ is must to get back the settlement
  6. Term Insurance is an absolute must have to financially secure future of your dependents. You should also consider having a mediclaim as healthcare expenses are skyrocketing with each passing day. As you get older, it becomes tougher and costlier to take a mediclaim policy, so start early
  7. Don’t take any financial investment decisions emotionally and also avoid last minute tax saving investment decisions, plan well in advance
  8. You must know all tax implications. You cannot avoid paying tax, but you can minimize by way of tax planning and investments
  9. Financial investments must be followed through a personal financial advisor, or after considering the opinion of a person well-versed in this field.
  10. Review your portfolio every six months, and take necessary action

These are general suggestions. Personal finance and investment decisions depends upon case to case. Please consult your financial and tax advisor, before taking any decisions.

(Contributed by Dhawal Mehta (CA, CFA). You can contact him on ‘[email protected]’ for financial planning and guidance)

Disclaimer: The above article is curated based on limited and publicly available open source information. The views and opinions expressed therein and all data and information so provided is solely for informational purposes, to be used at the sole discretion of the reader. If you disagree with any article or any part thereof, please contact us and we will resolve the issue at the earliest. KyaBae makes no representations as to accuracy, completeness, currentness, suitability, or validity of any information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use.

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