How to Do Financial Planning

How to Do Financial Planning is a crucial aspect that plays a pivotal role in managing cash flow and achieving life goals. It serves as a roadmap, outlining the steps needed to secure a happy, independent, and comfortable retirement. Setting clear financial goals is an integral part of this process, providing direction and purpose to one’s financial journey.

A well-structured financial plan offers a detailed insight into your income, expenses, savings, debt, investments, insurance, and more. It is not merely a necessity but a smart way to keep your financial house in order. As life unfolds, the financial plan adapts, ensuring that you stay on track to meet your objectives. Starting financial planning early is emphasized, as it lays the foundation for a secure and stable financial future. 

In essence, financial planning is a dynamic tool that requires attention to detail, offering a comprehensive approach to managing your finances effectively and achieving the life you envision.

How to Do Financial Planning: Must choose Guaranteed Return Options for Security

Why Govt. Guaranteed investments?

In the realm of “How to Do Financial Planning,” government-guaranteed returns provide a level of assurance and reliability for investors. When you invest in instruments backed by the government, such as certain bonds or savings schemes, you can generally expect a specified and guaranteed rate of return. This assurance stems from the fact that the government, being a sovereign entity, is considered highly creditworthy, and its commitment to fulfilling its financial obligations is typically strong. One example is explained below:

In the realm of “How to Do Financial Planning,” LIC’s Jeevan Utsav stands out as a dynamic life insurance solution, offering lifelong income and robust risk coverage. Its flexibility shines through in the premium payment terms, ranging from 5 to 16 years. This policy guarantees additions, ensuring a secure financial future for policyholders.

What sets Jeevan Utsav apart is its adaptability post-premium payment term. Policyholders can choose between Regular and Flexi Income Benefits, providing financial flexibility and security tailored to individual needs. The life cover is robust, with the death benefit being the higher of the Basic Sum Assured or 7 times the annualized premium, safeguarding a minimum of 105% of all paid premiums.

In the framework of “How to Do Financial Planning,” the plan also allows policyholders to augment their coverage with optional riders and access additional liquidity through loans. Opting for the Flexi Income Benefit comes with the added perk of compounded interest at 5.5% on the remaining amount with LIC.

In essence, LIC’s Jeevan Utsav emerges as an appealing choice for those seeking a well-rounded blend of savings, security, and Regular income in their insurance portfolio.

Here are some key benefits associated with this plan.


Assurance of Guaranteed Income: If an individual, aged 30, opts to invest approximately 5 lakh rupees annually for 11 years in LIC’s Jeevan Utsav, he is entitled to receive an annual payout of approximately 5 lakh rupees starting from the age of 44 throughout his lifetime. It’s important to note that the returns are purportedly guaranteed by the government through LIC’s status as a government-owned entity. This concept is demonstrated in the following example.

How to Do Financial Planning
How to Do Financial Planning
How to Do Financial Planning

Flexi Income feature: The “Flexi Income” feature of LIC’s Jeevan Utsav allow policyholders to accumulate income and withdraw amount later for specific life events such as child’s education, retirement etc. Below table explains this in detail.

How to Do Financial Planning

Tax Benefits: Depending on the prevailing tax laws, Jeevan Utsav offer tax benefits on premiums paid and income received. This can contribute to the overall tax planning strategy of the policyholder. In the above example Approximate Tax Saved Every Year: 1,65,000/-

Risk Cover: In the event of the policyholder’s death during the term of the policy, a specified sum assured or death benefit is paid out to the nominee or beneficiary. This is elucidated in the example below.

How to Do Financial Planning

Surrender option: If a policyholder decides not to continue with the policy and opts for surrender, he will be eligible to receive the surrender value. This is explained in the example provided below.

How to Do Financial Planning

Loan Facility: The loan facility in LIC’s Jeevan Utsav ensures that policyholders can meet urgent financial requirements without surrendering their policy. This feature contributes to the long-term sustainability of the policy, allowing individuals to navigate financial challenges without compromising the benefits of the plan. This is illustrated in the example presented below.

How to Do Financial Planning

How to Do Financial Planning: Steps for Effective Financial Planning

Embarking on a journey towards financial security involves a meticulous and dynamic process known as financial planning. This strategic endeavor plays a pivotal role in securing one’s financial future, encompassing a series of steps on “How to Do Financial Planning.” In this comprehensive guide, we will delve into each step, offering detailed insights into the art of effective financial planning.

Setting Financial Goals: The core of “How to Do Financial Planning” lies in defining clear and attainable goals. By categorizing these goals into short-term, medium-term, and long-term objectives, individuals can create a roadmap for their financial journey. Prioritizing goals based on urgency and importance ensures a focused and strategic approach.

Assessing Your Current Financial Situation: A crucial step in financial planning involves a comprehensive evaluation of the present financial landscape. This includes compiling information about income, expenses, assets, and liabilities. Calculating net worth by subtracting liabilities from assets provides a snapshot of one’s overall financial health.

Creating a Budget: Developing a detailed budget is the cornerstone of effective financial planning. By meticulously outlining all sources of income and monthly expenses, individuals gain clarity on their financial inflows and outflows. Categorizing expenses and identifying areas for potential cost-cutting fosters disciplined financial management.

Building an Emergency Fund: The essence of “How to Do Financial Planning” emphasizes that establishing a financial safety net is paramount. By saving at least 3-6 months’ worth of living expenses in a readily accessible account, individuals create a buffer against unexpected financial shocks. This strategic step ensures stability during times of unforeseen expenses or income loss.

Managing Debt: Debt management is a key component of financial planning. Identifying and prioritizing high-interest debts allows individuals to formulate a systematic plan for repayment, starting with the debts incurring the highest interest rates.

Saving and Investing: A systematic approach to saving a portion of income is vital for long-term financial success. Diversifying investments based on risk tolerance, goals, and time horizon ensures a balanced and optimized investment portfolio.

Insurance Planning: Evaluating insurance coverage, including life, health, property, and disability insurance, is crucial. Adjusting coverage based on changes in life circumstances ensures that individuals and their families are adequately protected against unforeseen events.

Retirement Planning: Determining retirement goals and estimating the funds required for a comfortable retirement are critical steps. Regular contributions to retirement accounts facilitate the accumulation of sufficient funds for post-retirement life.Determining retirement goals and estimating the funds required for a comfortable retirement are critical steps in “How to Do Financial Planning.” Regular contributions to retirement accounts facilitate the accumulation of sufficient funds for post-retirement life.

Tax Planning: In the framework of “How to Do Financial Planning,” optimizing tax strategy is an integral aspect. Being aware of tax-saving investment options and leveraging deductions, credits, and exemptions contribute to overall tax efficiency.

Review and Adjust: Financial planning is not a one-time activity. Regularly reviewing the financial plan ensures that it aligns with current situations and goals. Adjustments should be made based on changes in income, expenses, or life circumstances to maintain its effectiveness.

Stay Informed: Staying updated on economic trends, investment options, and financial news is essential. Continuous education empowers individuals to make informed financial decisions, adapting to the ever-evolving financial landscape.

Seek Professional Advice: In the context of “How to Do Financial Planning,” consulting with financial advisors, tax professionals, or estate planners adds expertise to the financial planning process. Seeking professional advice ensures that the plan is tailored to individual circumstances, optimizing its effectiveness.

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