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5 Important Tips for Better Financial Planning

Tax Saving

Understanding the different components of Financial Planning will enable us to use our resources in the best possible manner. Allocating funds in due course of life to reap interests in different ways (in terms of monetary benefits or security for health etc.) at different stages in life are the primary reasons for Financial Planning. Let's delve into important tips for better financial planning.

Investment is the golden word. It imparts benefits in the long run by enabling you to put your earnings to the best possible use. Therefore, securing your future. There's no denying that Investment is the essence of Financial planning. Both the words are used interchangeably, however, Financial planning is a much broader term and needs to be understood.

Financial planning pertains to efficiently channeling your earnings to enhance your lifestyle (in terms of monetary benefits), in the future to come. While most of us perceive it to be a daunting term that may be achieved only with professional guidance, it simply implies investing your money in the most efficient manner. The need for Investment starts as soon as there is a source of income. Facilities like Term Insurance, Investments, emergency funds etc. will help you efficiently invest your earnings and reap benefits that will secure your lifestyle for years to come.

The most important is understanding the best possible investment given your resources and vision for your life. Priorities your investments or money in-keeping with your personal life goals such as your retirement plan, dependence of family members, need for saving etc.

Understanding Taxation

In chronological order, the foremost is to understand the best possible investment given your resources and vision for the future. This is important because your investment has a direct bearing on your Taxes. More often than not, we end up making an investment that falls under a higher taxation slab than the returns it yields.

For instance, investing in residential property may seem like a viable option, however, the returns it may yield may be up to 10-15% and the taxes paid will be somewhere around 30%, this leads to a loss. Therefore, it is important for us to review our options for channeling your money in the most efficient manner.


As the name suggests Insurance assures us or our dependents of monetary benefits upon investment for a given period of time. Earmarking a certain amount from your earnings every month to allocate in Insurance will give you peace of mind and the knowledge that even after your life, your loved ones will be taken care of. There are different types of life insurances. For example  Health Insurance etc.For example Health Insurance etc.

The most effective out of the insurance options being Term Insurance, it's a policy under which up on payment of a certain policy amount every month for a fixed period, the beneficiary appointed by the policyholder gets monetary benefits if the latter dies during the term of the policy. The terms of this insurance are extremely flexible. For example, the policy holder can add 'riders' to the plan, the term of the policy can be increased thereby reducing the volume of each payment. You can consult insurance companies/agents and understand this in detail.

Insurance is a very important aspect of financial planning. It assures security not just for your but for your loved ones. Allocate your earnings towards the security of your family and dependents.


Being the key driver of your financial planning, investments are designed to reap financial benefits in the future. Investments can start from the very first day of you earning, they can start with small amounts and can catapult into bigger amounts over the years. If you are starting out and want to make small investments, there are options like Bonds, Stocks, Shares. Mutual funds etc.

The word 'investments' will take a whole new meaning at a later stage in your life and career as it implies investing in bigger assets like choosing to invest in the right home, commercial property etc. Making sound and forethought decisions pertaining to big investments will reap huge benefits, not just to you but to your generations to come. It can help determine the financial landscape of your family for a long time.

Savings and Emergency Funds

In the beginning of your career, it deems difficult to save. Given the marginal disposable income that makes it to your bank account at the end of every month, saving seems to be a far cry. However,  saving for a 'rainy day', as it is popularly quoted, helps in difficult times.

The privilege of health insurance may not be a part of every job that you opt for. Therefore, it is important to earmark a given amount as 'emergency funds' to combat difficult situations. Keep aside just 10-20% of your monthly earnings, preferably investing in short term mutual funds etc will give you a lump sum to use during a medical emergency or otherwise, later. Emergency funds are redeemable at any given point of time.

Retirement plan

Retirement is the ultimate plan for most of us. To be able to lead a seamless life post a certain age, without having to work, one needs to allocate funds. This is possible only with savings plan in one's life as early as possible. With the basic principle of compound interest, it has been proven that the sooner you start saving the smaller your principal amount of saving will have to be in order for you to reach the desired saving. There are retirement insurance plans as well that cover you and your spouse.

Having a retirement plan gives structure to your work time frame and sets seamless goals professionally. You may or may not opt to work after a given time. It stops being a necessity and begins to be an option.
It also renders you independent of your children or any other external support. Also, decide the course of your life and important financial decisions yourself etc if you control your finances.

Your hard earned money needs to be efficiently put to use. Channeling it in the best possible manner to maximize benefits for yourself deems to be the most sensible course of action. Being wise with your money right from the beginning will reap benefits your entire life. Get professional consultation if required and if you are dealing with a large amount. Financial analysts, brokers and planners are available to help with the same.

Insurance is a rather acknowledged means of making the most of your resources. Insurance necessarily puts your money to the best use. It enables you to allocate your money towards the life and health of your loved ones and yourself. Review the various Insurance plans thoroughly and make an informed decision. Correlate your personal life circumstances with the type of insurance that you need. This helps you in making the right choice.

Financial resource allocation can be a tricky business therefore reviewing all your options before taking a decision is important.


*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

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