As the saying goes, failing to plan is planning to fail and the same holds true when it comes to planning your finances; answer these 7 fundamental questions to set the base and way forward for your right financial planning.
What are you investing for?
The most basic question people fail to ask; are you planning for retirement or for your children’s education or house or a Car? Construct your portfolio in different ways to accomplish different goals and responsibilities.
What will happen if your employer stops loving you?
Did you ever plan what will happen if you get fired from your job? Mostly people won’t think that way, right? But if it happens to you, then do you have 6 to 8 months of cash reserves? You have to have a contingency tentative plan for what you will do if you suddenly don’t have your existing income & job. You need to take steps today itself to improve your financial situation and build on your cash reserves while still investing for achieving other goals. You need to have this cash reserves easily accessible whenever the need arises as withdrawing money out of your other funds like PF/FDs/MFs would be detrimental to your overall financial life.
Who will cry when you die?
What will happen if you die suddenly? Is it easy to think about death; No, but you have to have a plan to make sure that who will take care of your kids & parents or distribution of your assets as per your will?
What is the sole purpose of doing your financial planning?
There should be only one purpose to do your financial planning and that is to achieve ultimate “Financial Freedom”. It means attaining that situation in your life wherein you can do whatever you want to do. For e.g. what will you do if you get Rs. 100 crores in your bank account today? Will you still do the same work what you are doing today? Probably Not! Then what will you do, help you set the foundation for real financial planning.
When do you want to retire and how do you plan to spend your golden years?
Have you ever thought about how you would be spending your golden years and how much money would be needed to take care for all your requirements ranging from medical cost to necessities to luxuries?
Who are your Stakeholders?
Do you know who all would depend on you financially in future, define your stakeholders diligently which may extend to include your parents, brothers/sisters apart from spouse and children.
Which Financial Products to invest in?
You need to plan your investments carefully amongst the numerous financial products available in the market ranging from Mutual Funds/Equities/ PPF/ FDs/ Bonds/Gold/Silver/Real Estate and a term insurance for securing your life.