Here's how planned savings can build crores over time
Planned saving is not only effective but can also make you a millionaire. Financial planning is a long-term process. Understand your financial resources, create appropriate plans, and achieve your goals.
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Saving money
Many of us save money just for the sake of it. But, if you plan clearly how much to save for each need, it will be effective and can make you a millionaire. Planning how to save can turn thousands into millions. Financial planning is a long-term process. Understand your financial resources, create plans, and achieve short-term and long-term goals.
Financial advisor
Choose a qualified financial advisor who understands you. The advisor should be trustworthy, a chartered accountant, and have long-term experience. They should be a full-time financial advisor, not part-time, as many part-timers treat it as just another job. It's best to avoid such advisors.
Financial information
Your plan should include all your financial information: annual income, long-term and short-term goals, assets, debts, cash flow, investments, retirement plan, tax-saving plans, and insurance needs.
Goal-oriented saving
There's a big difference between saving with and without goals. Goal-oriented saving helps allocate funds correctly. Without goals, we might misuse savings, leading to hardship. List short-term and long-term goals, prioritize, and save accordingly.
Know your assets' current value:
House, real estate, gold, bank balance, shares, insurance, mutual funds. List your liabilities: home loan, car loan, credit card balance. Subtract liabilities from assets to know your net worth.
Create a budget:
Track daily expenses, preferably in a spreadsheet. This helps identify areas of overspending and avoid unnecessary expenses.
There are no fixed saving rules:
It depends on age, income, and expenses. Generally, save 10% of pre-tax income. If this seems too much, don't give up; start small and gradually increase.
Prioritize insurance in financial planning:
The insurance sector has evolved, with new plans emerging. Review existing plans with your advisor and make necessary changes based on your goals, objectives, and risk tolerance. Expect a tailored plan from your advisor, developed in consultation with your lawyer, insurance agent, and stockbroker.
Even the best plan is useless without implementation:
Your advisor provides advice; you must act. Consult another advisor if needed. Adjust your plan during major life events like marriage, childbirth, or unexpected incidents. Review your plan annually and adapt to changing circumstances.
Planned saving is effective:
Planning is an art, especially financial planning, which can seem daunting. But like getting used to bitter gourd, it becomes easy. Many save without a clear plan. Planned saving is effective and can lead to millionaire status.
