If personal finance is a concern for you, follow the basics
What is Personal Finance?
Personal Finance construes all financial resolutions and implementations of resolutions of an individual or household which includes budgeting, insurance planning, mortgage planning, savings and retirement planning, income tax & estate planning and so on. Hardly any individual religiously maintains his budget. Budget is basically projected cash flow statement.
In parliament, we all notice budget is placed on 1st week of February every year. Why it’s so important? Govt. can understand its projected income & expenses to implement predefined strategies. Similarly, you need to maintain your personal monthly budget at home.
All such individual financial activities are under the preview of Personal Finance. Mostly, people ignore the budget due to innocence.
Personal Financial Planning processes evaluate your current & projected financial status, your short-term, medium-term and long-term needs. Even distant requirements for the family in case of demise of potential earner is laid down in the Financial Plan. Processes to execute the plan in to action with periodical reviews to achieve your aspirations/goals are also clearly mentioned for you.
While you can visualize your financial goals, you tend to be obsessed till you can shape them into reality within your financial constraints. Personal Finance is an individualistic movement that depends on one’s subjective factors like income, living requirements and aspirations/goals.
“As you have limited resources with too many directions, a detail financial plan is impeccable. If you fail to plan, you’ll be standing on opposite directions.” –Uttam Kumar Sen
Prudent management of personal finances gives you peace of mind
Personal Finance includes financial resolutions and animations of an individual’s household, combining of:
- Existing investments, income & expenses
- Budget of daily, monthly, quarterly, half yearly & yearly
- Assets & liabilities (Net worth)
- Contingency Planning
- Insurance Planning
- Debt Planning
- Retirement Planning
- Planning for children’s future provision
- Planning for potential dependents
- Divorce Planning
- Savings Bank operation & track
- International & Domestic Vacation Planning
- Start-up Capital Planning
- Self-development Planning
- Purchase of house & car planning considering personal cash flows & net worth
- Proper channelization of existing investments by keeping pace with personal goals & aspirations
- Life Cash Flow
- Tax planning
- Special periodical subjective reports as per periodical reviews
All the above bullet points have different functions and hence neither they’re identical with each other nor substitute to each other.
As we mentioned “special periodical subjective reports as per periodical reviews”-What does it mean? After completion of Financial Plan, as Certified Financial Planner in Kolkata, we personally prepare a special write up containing all the implementation process in a nut shell & make it tangible to our clients. We strongly believe hand-held financial planning processes towards peace of mind.
Considering the above bullet points, as a Financial Advisor in Kolkata, we work on it. While we review the Financial Plan with our clients, both clients and planner can see the differences. We can change/alter the plan accordingly as this is a process.
General concerns related to Personal Finance are answered through Financial Planning processes
Why is Personal Financial Plan an integral part?
A Financial Planner digs deep & provides personalized services. Personal Finance has developed a lot in recent years. Have you learnt the subject in your schools/ universities? Probably not. That is why, one must hire a professional to avoid mistakes regarding personal finance.
On the contrary, our clients come from different family/ social/ income/ educational & professional/ geographical location/ demographic backgrounds. There’s no thumb rule. Both macroeconomic & personal factors play a preeminent role in personal finance. Many investors don’t have adequate information to make the most rational decisions to implement and they’re having herd behaviors. As a specialized field, one can hardly manage these matters effectively due to products complexity & push sale by sales person. Products are launched with general approach. They can’t be unique unless you know your uniqueness. For example, a unique product can start and accelerate healing your chronic financial problems. As Investment Planner in Kolkata, we understand that identifying the suitable investment products matter to a great extent.
Thus, you need to understand “Personal Finance” where you may be a novice. Without proper knowledge about medical science, self medication is injurious and too costly for a family. Similarly, you shall confer with a Certified Financial Planner who’ll guide you prudently in this regard.
Creating a well-designed plan for the future is less costly than being unplanned!
You can take costly loans for solutions, which may be a dead trap. You can opt for life insurance, home insurance, health insurance or any other financial products like mutual funds, direct equities, fixed deposits, etc. as solutions but it may not be appropriate for you and your family. Solutions must be in sync with your risk profile, objective, macro economic conditions, personal factors, etc.
Market theory i.e. efficient market hypothesis is the guidance of current assumptions but since it is one to one interactions, I have to act rationally & control the behavioral gap.
“Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.”
― Dave Ramsey
