Financial Planning: It would be unwise to devise a plan without knowing what you want to save for
The coronavirus pandemic has forced us to make several adjustments in our day-to-day lives. Amid the mounting uncertainty, the current working population is shifting its objectives to those that are closely aligned with ticking items off of their bucket list. Yet, many feel they are not making enough progress with regard to reorienting their financial goals. In such a scenario, however, there is an easy way to do what you want to do now and still maintain a healthy savings habit in case you wake up one fine morning and decide to scale Mt Everest or go scuba diving in the Andamans.
Why Long-Term Financial Planning?
It is a roadmap to a secure future and an investment strategy that usually extends over more than a year. A sound long-term financial plan considers future scenarios, demands and uncertainties, and chalks out strategies accordingly to help individuals or institutions navigate challenges more easily and confidently.
What Should You Do?
Start by making a plan and putting it into action right away. Keeping it on hold for tomorrow will only increase the burden. There are several tools that can help you allocate money periodically for your future, like when you retire — IIPs, mutual funds, insurance schemes etc, depending on your current and projected earnings.
While you are at it, you should avoid these common mistakes. Here are a few tips to keep in mind:
Set Money Goals: It would be unwise to devise a plan without knowing what you want to save for. Be specific with your goals, from a family vacation in the near future to long-term plans like where you want to be when you retire.
Be Credit Savvy: Paying your bills on time and lowering your debt will give you a credit score and you will be able to save money on mortgage interest and car insurance. Check your credit score online and minimise errors if you have a lower score.
Don’t Let Wants Become The Mother of Needs: Keeping wants in check and fulfilling needs is one way to minimise immediate financial expenses and boost savings. If the retirement fund allocation is falling short of your goal, cut back on avoidable expenses such as a planned holiday trip.
Keep A Separate Emergency Fund: The pandemic has disturbed everyone’s plans but also taught us that it is necessary to earmark money for emergencies. It will help you during an unforeseen situation without altering your long-term financial planning. The fund should have at least 3-6 months’ expenses. This emergency fund will serve as a safety net for you and your family.
Risk Diversion: If you put money in financial markets, try to spread out your investments across several portfolios, including trading in bullion, equity, real estate and commodities.
Seek Help: Even if you are a financial professional, don’t hesitate to take help of an expert who can guide you with your plans objectively, without letting emotion or ambition get in the way of your ultimate financial goals.
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