Financial planning – Top Golden rules

Framework for achieving your life goals

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Financial planning is the process, which provides you a framework for achieving your life goals in a systematic and planned way by avoiding shocks and surprises. Instilling the habit of financial planning in young adults is a tough job. However, when they volunteer to plan about their finances, one wouldn’t know where and how to begin. Here are 10 golden rules that one must follow to plan their finances well.

Manage your Money

You may have many financial goals in your mind. Like buying a vehicle or the latest smartphone or wealth accumulation. In all these situations, you need money. But where will it come from? You got to have savings!

Saving money helps you avoid falling into debt traps. Not only this, but systematic saving on a regular basis can make you rich. You may achieve your financial goals in a timely manner. Now you might be wondering how to save? And even more important how much to save? As soon as you get your salary, start putting it under various heads. These heads can be expenses, EMIs, investments, and savings.

Ensure that you save a minimum of 10% of your income every month it is Financial planning! It can be that simple!  you may invest this amount in a liquid fund. Liquid fund is a type of debt mutual fund which invests money in fixed-income generating instruments like FDs, commercial paper, certificate of deposit etc.

Plan your expenses wisely

Try preparing a budget. Unless you have a budget, you won’t be able to control your cash flows. A budget simply shows how much money you have coming in and how those funds are spent.  Start by categorizing your expenses into fixed and variable; urgent and non-urgent; necessities and luxury; avoidable and unavoidable.

In this way, you will create a full inventory of expenses in front of you.It’s all about prioritizing. You need to accept that you have got limited resources and unlimited wants. But you have to manage your resources.

After addressing all necessary expenses, you can allocate some money towards entertainment and leisure. To avoid overspending, you can create a list of groceries before visiting the departmental store.


Maintain a personal balance sheet

Having a personal balance sheet helps to know what you own and what you owe! It’s a pretty powerful tool to take your finances to the next level. Before getting started, pull together your bank statements and other proofs of the liabilities. Then, list down your assets like the bank balance, investments, home value, and value of other assets.

Take a sum of all the assets to arrive at the total value of your assets.  Further, list down your liabilities like the car loan, home loan, credit card balances and remaining balances in other loans. The sum of all the liabilities will show the value of the money you owe.  Further, list down your liabilities like the car loan, home loan, credit card balances and remaining balances in other loans. The sum of all the liabilities will show the value of the money you owe.

Dealing with surplus cash

How you deal with surplus cash determines your future. When you don’t have a plan, you are likely to overspend. This money could have been used to make you financially self-sufficient. If you don’t invest, your money won’t grow to bridge the inflation gap. Otherwise, you might not be able to retire as you would want to.  Investing can be a great way to channelize the extra cash and counter inflation. It can be used to grow wealth and divert it to goal accomplishment. The earlier you start investing, the better.

Start with identifying goals like buying a car or planning for retirement. Categorise those goals into short-term and long-term. Goals that can be achieved within 1 to 3 years are essentially short-term. Goals that need a horizon of 3-5 years are called medium-term goals. Goals that require more than 5 years to achieve our long-term goals.

Planning your Taxes

It is necessary for you to analyze your finances from a tax efficiency point of view. You are free to claim various tax exemptions, deductions, and benefits so as to reduce your tax liability at the end of the financial year.

Even though tax planning or Financial planning is very much legitimate in nature, you need to ensure that you don’t indulge in tax evasion or tax avoidance. There are a number of deductions available under Sections 80C through to 80U that are given in the Income Tax Act.

The most efficient way to take advantage of Section 80C is to invest in Equity Linked Savings Scheme (ELSS). It has the shortest lock-in period as compared to all the other tax-saving options available under Section 80C.

Under this section, you can save taxes up to Rs.45,000 and avail a deduction of up to Rs.1.5 lakh. Additionally, ELSS is a diversified equity fund that helps you achieve your financial goals via investment in the equity market.



If you don’t know where to begin from, then take advice from a reliable source. You can even invest in Mutual Funds to get the benefit of diversification & professional fund management. Investing in Mutual Funds is made paperless and hassle-free at most of banks. The following steps can help you start your investment journey.


Best Way, You can also assign a no-spend day in the week.



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