Nidhi Tiwari, 28 years, Biotech Engineer, Bangalore: How should I proceed with creating a financial plan for myself?
The first step towards creating a financial plan is to list down your goals and requirements clearly. Once you clearly note down the answers to the following questions, the steps ahead are pretty straightforward. A thorough financial plan thereafter will factor in all these questions and discuss action items elaborately. You can use many budgeting and planning apps available to streamline your work.
What is my current net worth: Your current net worth would be total assets and investments minus your debts and liabilities. You will also have to estimate what percentage of your salary goes on expenses and what percentage are you able to save. This will have a bearing on the amount of money you will be able to invest
What are my short term and long term goals: Your short term goals could be a vacation, buying a car, etc. Your long term goals can be early retirement, planning for your children’s education, etc.
How much money is needed for my goals: You can arrive at this amount after factoring in inflation.
How much risk am I willing to take: The amount of risk you can take depends on what liabilities you have, the number of dependents you have, your age and will eventually have an impact on the choice of investment avenues you will select to grow wealth
Where Should I Invest: Should you invest in gold, or mutual funds or ppf? Or allocate a part of your asset to different investment avenues? This will be an outcome of your risk appetite, the time frame within which you want to achieve your goals, etc.
The query is answered by Harsh Jain, Co-founder and COO, Groww