How to Do Financial Planning

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How to Do Financial Planning

• Elite Wealth Advisors Ltd.
• S-8, DDA Shopping Complex
• Mayur Vihar Phase-1
• 
  Delhi-110091

9650901058 / 011-40000919
marcom_at_elitewealth.in
www.elitewealth.in
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Why is Personal Financial Planning Important

• To manage income and expenses.
• To create an awareness of your current financial
  status.
• To plan for the future by developing goals and
  devising ways to achieve those goals.
• To provide a system of evaluation and revision
  for your financial progress.

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Why Do You Need a Personal Financial Plan?

• For most people it is easier to spend than save.
• To track your expenses, so you dont spend more
  than you think youre spending.
• You would like to achieve financial independence
  or retire someday.

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Why Should You Develop aPersonal Financial Plan?

• To help you achieve your financial goals.
• To help you achieve financial independence.
• To help you understand where all your money is
  spent.
• To help you support those that have supported you.

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The Personal Financial Planning Process

• Step 1 Define Your Financial Goals
• Step 2 Evaluate Your Current Financial Status
• Step 3 Develop a Plan of Action
• Consider Your Goals
• Step 4 Implement Your Plan
• Step 5 Review Your Progress, Reevaluate, and
  Revise Your Plan as Your Financial Status Changes

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Step 1 Define Your Financial Goals

• Specifically define and write down your financial
  goals to reflect your financial and life
  situation.
• Attach a cost to each goal.
• Set a date for when the money is needed to
  accomplish the goal.

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What are the time horizons for financial goals?

• Short-term goals can be accomplished within a
  1-year period
• Intermediate-term goals take 1-10 years to
  accomplish.
• Long-term goals take more than 10 years to
  achieve.

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Why are goals the cornerstone of a financial plan?

• Goals keep the future in mind by reminding you of
  the rewards.
• Goals entice you to keep the plan in effect.
• Goals provide tangibility for the question, Why?

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Step 2 Evaluate Your Current Financial Status

• Your income
• What determines it.
• Your expenses
• What determines them.

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Your Income What Determines It

• Earnings determine standard of living.
• Education is the key factor in determining income
  level.
• 70 of wealthy householders finished college.

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Your Expenses What Determines Them

• Expenses are your costs of living.
• There are two types of expenses
• Fixed expenses such as rent, car payments, and
  day care are expenses that dont change in amount
  and are usually controlled by a contract.
• Variable (flexible) expenses, like your phone
  bill or the amount you spend on entertainment,
  are expenses over which you have control.

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Step 3 Develop a Plan of Action

• Flexibility -- The ability for your plan to
  change as your situations or goals change.
• Liquidity -- Your ability to convert non-cash
  assets into cash with relative ease and speed.

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Step 3 Develop a Plan (contd)

• Protection -- Your ability to meet the unexpected
  large expenses without destroying your plan.
• Minimization of Taxes -- Your ability to pay as
  little as possible to the federal government.

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Step 4 Implement Your Plan

• Use common sense and moderation dont force
  yourself to track every penny.
• Remain positive about your plan dont view your
  plan as a punishment.
• Rewards await you, so dont lose sight of why you
  developed the plan.

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Step 5 Revise Your Plan

• Periodically review your progress to see if any
  fine tuning needs to be done.
• Make sure that your plan still matches your
  goals.
• Be prepared to start over if your plan no longer
  meets your needs.

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Summary

• Build your financial future around a financial
  plan
• Manage the unplanned -- financial planning
  withstands minor setbacks.
• Accumulate wealth -- financial planning maps out
  strategies for meeting your goals.
• Save for financial independence and/or retirement
  -- financial planning helps you determine the
  costs of retirement and how much you need to save.

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Summary (contd)

• Cover your assets -- financial planning
  includes protecting your assets with insurance
• Invest intelligently -- financial planning helps
  you understand the principles of investing
• Minimize taxes -- financial planning helps you
  keep your assets where they should be, in your
  own pocket

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Summary (contd)

• Define your goals you must first know where you
  want to go before you can decide how to get
  there.
• Evaluate your financial health you must first
  know where you are before you can determine where
  you are going.
• Develop a personal financial plan you must
  first draw a map before you can follow it.

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Summary (contd)

• Implement your plan you must begin before you
  can end.
• Review your progress you must continue to check
  the map t ensure you are staying on course.

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Thank You
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