Personal financial planning9/24/2023 First, decide and then divide your goals into three categories –Short-term, medium-term and long-term goals. Step 5 – What Are Your Goals? Set Your Financial Goals In step 3 of personal financial planning and analysis, we had found that Rakesh and his family can save Rs. Once this figure (Income minus expenses) reaches a positive value, you can move to Step 5. Otherwise, you need to identify which expenses are mandatory and which can be reduced. And we can now go ahead in the process of financial planning. If the surplus is in positive that means, you have saved something. Thus, the total spending including the one mentioned in Step 1 is Rs. 1.5 lacs in Public Provident Fund (PPF) annually. Now total income of the family becomes Rs. As it was missed in the first point, the same will be added to the income part here. Hence, you have to take a total of annual income and expenses and calculate the surplus. Similarly, monthly salary is there, but you may get a yearly bonus or Leave Travel Allowance as a lump sum amount. You’ll find that some of the expenses are annual like insurance premiums and some are recurring monthly expenses. Step 3 – Have You Ever Calculated What’s Left After Your Expenditure?Ĭalculate surplus, i.e., the difference between Income & expenses. While doing personal financial analysis, we found out that in a year, Rakesh and his family spend Rs. You can edit the auto entries and can also add your cash spending. These apps help you to identify the areas of your expenses by automatically reading your spending SMS and categorizing them. There are many mobile applications available in the mobile ‘play store’ like Money view, ET Money and Walnut Money Manager. The list can be huge, but you have to identify the major expenses and note how much you are spending in which category. The expenses are further to be explained by categorizing in different heads like EMI, Rent, Medical, Dining out, Grocery, Utility bills, Electricity bill, Snacks, drinks, travel, insurance, maintenance, beauty, fitness, petrol, clothes, electronic appliances, savings, etc. The simplest way to calculate expenses is to calculate the difference between the amount that comes as salary at the start of the month and the amount which is left on the last day of the month. Step 2 – Do You Know Your Expenses? Know Your Expenses Also, they own a house from which they earn Rs. For financial planning, salaries of Rakesh and Maithili are added. Rakesh and his wife Maithili are the earning members of the family while his father, mother, and son are not the earning members of the family. If there are multiple earning members of the family, add their income too. Step 1 – How Much Do You Earn?įirst of all, calculate your earnings from salary, interest income, rent, shares or mutual fund dividends, etc. ![]() ![]() ![]() In this article, we will describe ten easy steps, which you can follow to reach your financial goals. There are multiple steps in personal financial planning and analysis.
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