Want to secure your financial future? Here’s how you can create a solid financial plan

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A house of your own.

A sizable emergency fund.

A reliable alternative source of income.

And a significant retirement fund for your golden years.

These are all great financial goals to have, isn’t it?

But a goal without a plan is just a wish.

So, to secure your financial future and to ensure that you meet all your financial goals, what you need is a solid financial plan.

And here’s how you can go about planning for that bright and secure future.

  1. Make a note of your financial goals

    If you’re creating a plan to save for the future, you need to first know what you’re saving up for, isn’t it? That’s why the first step in financial planning is to write down your financial goals.

    And it’s not enough if you just write them down vaguely. To truly form the basis of your plan, your goals must be S.M.A.R.T.

    Wondering what that is? Well, it’s an acronym for:

    • Specific
    • Measurable
    • Achievable
    • Relevant
    • Time-bound

    For example, instead of simply saying “I want to buy a house,” try something like this:

    • I want to buy a 3BHK house
    • Within a budget of Rs. 80 lakh
    • By investing Rs. 50,000 each month for 10 years
    • So that I can move to this property when I retire
    • 20 years from now

    The more details you put into your goals, the easier it will be to plan for them.

  2. Don’t just save. Invest.

    Saving up for the future is one thing. But investing is a whole other ball game. What’s the key difference between these two?

    Well, when you save, you ensure that your money is protected. But when you invest, you allow your money to grow.

    It is essentially a question of capital preservation vs. capital appreciation.

    To check off all your life goals and to secure your future, your financial plan must include a range of investments to meet your short-term and long-term needs. Based on your risk profile, you can choose from different investment options with varying levels of risk.

    Check out some of the different investments under the common risk categories here.

    • Medium-risk investments for moderate investors:
      1. Blue chip stocks
      2. Dividend paying stocks
      3. Gold
      4. Corporate bonds
    • High-risk investments for aggressive investors:
      1. Direct equity
      2. Equity mutual funds
      3. Cryptocurrency
      4. Other upcoming assets

    ●Low-risk investments for conservative investors:

    1. Treasury bills
    2. Government bonds
    3. Fixed deposits
    4. Money market instruments
  3. Pay off your debt

    Debt repayments should be another important component of your financial plan. To pay off your existing liabilities, if any, you need to make the best use of the funds you have. Poor planning can stretch out your debt repayment phase to several years, and that is precious time lost.

    If you close your debts sooner, you can save more for the future and retire comfortably, isn’t it? So, to pay off any dues more efficiently, here are some debt pay-off strategies that you could include in your financial plan.

    • Pay off expensive, high-interest debt first.
    • Look past the minimum balance payable and make larger repayments if you can.
    • Don’t take on more debt.
    • Set reminders and pay your EMIs on time to avoid penalties.
    • Consolidate your debt and negotiate the interest rates, if possible.
  4. Secure your family’s future with life insurance

    When it comes to future-oriented planning, life insurance is an essential part of the package. A life insurance plan gives the policyholder’s family members the financial protection they need in case the policyholder passes away. This is the most fundamental benefit that all life insurance plans provide.

    For example, say a person purchases a life insurance plan that offers a life cover for 40 years. In return, he pays an annual premium of Rs. 50,000. The life cover offered includes a sum assured of Rs. 1 crore. Now, if the policyholder passes away during the policy term, the insurer will pay out Rs. 1 crore as death benefits to the policyholder’s nominee(s).

    In addition to this, life insurance plans - based on the type - also offer a variety of other benefits that help plan for your future. Some of these include:

    • Maturity benefits paid out on the policyholder surviving the policy term
    • Add-on riders with various specific benefits, like critical illness covers, accidental death benefit riders, and waiver of premium riders
    • Tax benefits1 on the premiums paid and the benefits obtained

    All these benefits can add up and help you build a future that is financially secure - both for yourself and for your family.

  5. Set up sources of passive income

    While some people may be keen on working all their lives, most others look forward to retiring, so they can finally do all the things they’ve wanted to.

    It could be something as small as picking up a hobby, or something as big as travelling the world. Whatever your post-retirement dreams may be, you’re going to need a reliable source of income to fund them.

    Without your primary source of income, you’ll need to set up one or more sources of passive income. Here are some ways in which you can do this.

    • Put your money in a high-yield savings account
    • Rent out a spare property if you have one
    • Invest in life insurance plans that pay our regular income
    • Include dividend stocks in your portfolio
    • Invest in REITs

Bonus tip: Review your plan periodically

Once you have created your plan, it’s a good idea to stick to it in a disciplined manner. But it doesn’t stop there. You need to review your financial plan frequently and periodically. This way, you can ensure that your plan continues to remain aligned with your goals for the future.

At some point in life, your goals may change. You may add a new dream or two, or you may have accomplished some goals earlier than planned. At such junctures, you need to review the plan and modify it as per your changing requirements.

So, that sums up the details of how you can create a solid financial plan to prepare for your future. And it’s best to get started with your plan as early in life as you can. Time is, after all, your best friend.

Read next: IS LIFE INSURANCE A RETIREMENT PLANNING TOOL?

A big part of planning for the future is planning for your retirement. And did you know that life insurance can help you prepare financially for your golden years? Our blog on this subject has all the details you need.

Read it here

NEED PASSIVE INCOME ONCE YOU’VE BID GOODBYE TO 9-TO-5? HOW ABOUT PASSIVE INCOME + A LIFE COVER?

Securing your future just got easier, thanks to the ABSLI Vision LifeIncome Plus Plan (UIN: 109N131V01).

With this plan, you get a host of benefits under one policy - Guaranteed regular income, a life cover up to 100 years of age, add-on riders and the option to get cash-in-hand even while you’re paying premiums.

Sounds too good to be true, right?

Know More

1Tax benefits are subject to changes in tax laws. Please consult your financial advisor for more details.

ABSLI Vision LifeIncome Plus Plan (UIN: 109N131V01) is a non-linked participating individual life insurance savings plan. ADV/7/21-22/594

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