Being a successful investor has one important prerequisite and that is you must have a proper financial plan with you for every circumstance in life. A financial plan is nothing but a concept to plan your finances keeping your income, current expenses and future goals in mind. And if you have enough money at the right time for your every need is like a dream come true.
Personal finance is all about chalking out that financial plan and execution of the same for future goals. Your plan should be practical and attainable and should not be like a distant dream. Because one thing can look like a dream today but with consistent effort and proper planning the dream can be achieved. Your plan must include all the aspects of your finance like income, expenditure, savings, loan, investment and any other outstanding issues for which you have to pay later.
But despite catering to all the needs, you can not stick to a fixed and rigid plan in the modern world. And the reason for the same is many like change in your income, any sudden financial emergency or anything else. So, if you have a plan for your financial needs today, it may not work tomorrow for you. So, here arise the need for continuous monitoring and rechecking of finances at regular intervals. It will surely suggest measures to be taken in future with your budgeting like change in the plan. It is suggested that you must review your planning once a year to track and upkeep the investment life healthy.
Its time to review your financial plan
We will discuss some of the reasons in this article, which can affect your plans and you must consider them as they call for a review of financial plans:
If your Earnings changes
Your earnings or salary in the case of salaried people plays an important role in planning the finances. There can be changes in your earnings for whatsoever reason, but if it happens you must have a look at your financial plan immediately. Profit or loss in business and annual increment in the monthly income or loss of jobs can be some of the changes. An increase in earnings should be channelised into investments so that it can generate wealth over a period of time for you and your family. It will also act as a cushion in case of loss in the business or loss of job.
Hence, if you see incremental growth in your earnings, you must revisit your financial plan and review it. If you have a good plan in action at a present time but facing loss then also you must readjust your goals and accordingly review your finances timely.
If you have made large purchases
if you think that you made large purchases that are much higher than your budgetary planning, it is time to review your financial plan immediately. Because carrying that huge expense with the same plan will take away your sleep as you only have to repay for that. You can defer the payments for some period of time but you can not avoid them. Alternatively, you can make a smart choice of paying into instalments if you made those purchases through Plastic money like a credit card. But mind it that by paying in instalments, you are going to pay the amount with interest to the company.
Have you built a Home over Home Loan?
Building a home is taken as a prestigious issue in our society and it is a need as well sometimes. But if you don’t have enough income to afford a home for yourself for time being, it is advisable to skip the idea. But as I said it is taken as a prestigious issue sometimes, and it makes us build our home at any cost. Yes, we can build our sweet home despite having a financial crunch at our end and that is by taking Home loans.
Rising prices of land and building materials made the process of building our personal homes a costly affair. By taking a home loan for this purpose, we Indians make sure that the maximum of our earnings goes to that company for long in life. If you took a home loan, then you must check your financial plans and goals and must re-adjust them catering the home loan and its instalment into account.
Striving for something more
Individuals make their plans by looking at the current aspects and future goals and these plans act as the primary steps to achieve those goals. But your goals and aspirations can be changed in future and that is but natural. Aspiring for something more is important for human beings to keep them lively. Aspirations can be increased from the planned ones for many reasons like societal or peer pressure.
One can aspire for higher studies which may be different from the planned strategy because of changes in technology or employment requirements. For example, one may plan to buy a two-wheeler and start saving for the same. But as his income grows he may want to go for a four-wheeler over two-wheelers.
Every one of us has some special occasions in our life which need to be undertaken at any cost. These occasions include higher education, marriage, the birth of a child, and the education of the child which acts as must accomplish things. These occasions call for an urgent and huge expenditure out of our pocket and it can not be deferred or avoided. So, if you encounter any such occasions in your life, you must immediately look at your finances and adjust them accordingly.
At present time, the cost of a healthy lifestyle is increasing by many folds. Accordingly cost of the medical treatment and other hospital facilities increased by large numbers. And medical emergency is a thing that we can not predict and have to face in an emergency. Also, we are surrounded by many lifestyle diseases which are more harmful and costly than traditional diseases. So, to meet these medical emergencies we have to dip into our budget deeply which makes us attentive to review our financial plan immediately.
There is nothing wrong with meeting large expenses or striving for something more in your personal life. But what it indicates to us is for periodical visits to our financial plans and adjustment of the same according to the present situations.
So, all I am trying to say here is that we must remain well prepared financially so that it does not affect our lifestyle. Accordingly, we can make plans and start investing for the goals timely, and there are many investment options available in the market for specific goals. Like if you are willing to invest with mutual funds, then there are mutual fund schemes available for retirement, short term goals etc, and you can choose to invest in them as per your requirements.