Full-Proof Financial PlanA financial plan is a term plan that helps individual in setting up their financial objectives and goals against the available finances and investments. A strategized financial plan not only helps in improving and managing finances but also makes future safe and secure.

Also known as ‘budget’ in common man term, a financial plan typically ranges from 1 to 5 years or sometimes even more to meet out specific requirements.

However, charting out a perfect financial plan is not an easy task. You have to follow a step-by-step procedure as it is governed by various factors. So, find below the complete procedure or tips that will help in preparing a full-proof financial plan.

Important Factors to Be Kept In Mind While Preparing Financial Plan

Size of the Family: Whether you are an individual or living with family with dependents.

Age: Individual/ Family members/dependents.

Investments: It includes all the financial assets where you have invested like loans, mutual funds, shares, stocks etc.

Goals: It includes things like buying a property, car or going on a dream vacation etc.

Risk Factor: It is a crucial decision-maker when you plan to invest your savings.

Also read: Single Mothers: Know How to Manage Finances

Step-by-Step Procedure to Prepare Financial Plan

Step 1: Prepare an annual plan which is divided on either monthly or yearly format. According to experts, it is better to divide it into annual financial years as you can easily work upon your taxes. At the same time, you can also plan to invest in various tax-saving schemes that can provide you yearly benefits.

Step 2: After making the annual plan, it’s time now to estimate your yearly income from various sources like salary, EMI, profit from business, shares, stocks, mutual funds etc.

Step 3: After calculating the annual income, list out your monthly or yearly expenses. Make a note of your regular expenses which you can’t avoid and which can be avoided. Only then, you will be able to prepare a firm financial plan. At the same time, you also have to check it on regularly or monthly basis to avoid underestimation or overestimation.

Step 4: Once you have estimated your expenses, you can now decide whether income gives you a scope of saving or not. Your income never remains fixed in case you are a businessman or salaried individual. So, a hike in the salary gives you a chance to increase your savings. At the same time, you can also control the unnecessary expenses to increase the savings. Perhaps, it is one of the best ways to save much for the later stages.

Step 5: With an increase in your saving, you can disburse the amount in various income-generated assets like PPF, mutual funds, fixed deposits, equity and other to generate and garner high profits and interests.

Step 6: Once you are done with the above steps, it’s time to determine your risk profile that plays a crucial role in planning your investments.

Step 7: Your financial plan will never be completed if you will not involve additional or second source of income that can be used during emergency periods or any mishappening.

Follow these steps and prepare a strong financial plan for a safe future.

Also read: Tax Saving Tips: Investments under Section 80 (C)