Finance

Top 5 Key Aspects of Personal Financial Planning

Financial planning at an early age can be really helpful as it can guide you about what steps you need to take in order to set yourself up for a financially independent time ahead. However, not all plans go according to what is decided on the paper. At times, when things don’t go well, you can rely upon a lender to avail personal loans. 

A personal loan is an unsecured loan. It does not need any collateral. It also is not restrictive on the type of expense you make after receiving the personal loan amount. In India, you can easily receive a personal loan amount of about 10 lakh rupees with a tenure of about 5 years. A personal loan is easy to avail as it does not have many complications & the personal loan process is swift in nature. You can receive your personal loan amount within hours after approval. 

Personal financial planning is one of the fundamental steps towards sound financial health. 5 terms can encapsulate it. The terms are as follows: 

  • Savings
  • Investments 
  • Financial interest protection
  • Tax planning 
  • Retirement Planning 

Let us go into the depth of each of these terms & get a better idea about personal financial planning. 

  1. Savings for the future: Life is unpredictable & we do not know what crisis may hit us at any given moment. In order to tackle such situations, we need savings. Savings are basically what remains of your income after expenses & investments. Debt instruments are a wise way to keep the money invested as well as get returns. The investment in these instruments can be easily withdrawn when the need arises. 
  2. Investments: Investment is what you set aside for the future & it increases the value of the funds. It increases with passing time & in an asset. Investments are savings that add value & provide you with more money for the future. Investment can be divided as per your needs & goals. They can be short-term & long-term and can also be divided based on your risk appetite. 
  3. Financial interest protection: Protecting your finances & financial interests of your dependents is an important step towards financial planning. If your finances are vulnerable to crises, you may easily face trouble. Therefore, insurance is what helps you protect your financial interests. Insurance like term insurance, health & critical illness insurance, accidental insurance & mortgage protection insurance are the best choices. 
  4. Tax Planning: Tax planning is different from tax evasion. Tax planning involves making investments & other expenses in a way to save tax. Examples of tax saving sections are section 80C & section 80D, among others. 
  5. Retirement planning: Planning is always for the future. So, if you are planning your finances, you need to account for your retirement as well. Leading a stress-free retirement life is what everyone dreams & aspires for. 
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Taking charge of your financial status & health today is one of the smartest things you can do in these turbulent times. Consulting a mentor or a professional may help you with better guidance besides conducting research independently. 

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