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Do you struggle to keep your money from disappearing before the month ends, despite earning a decent salary?
It’s not a surprise, considering how you used to pay for QR codes in restaurants and shopping malls, laughing and enjoying moments with friends.
And of course, there were those times when you maxed out your debit and credit cards without properly managing your income. This impulsive spending is the result of poor money management. Perhaps you still do not understand what financial planning is.
The good news is you can still learn about personal finance management from FinQuo Versity’s courses.
But now all those expenses came at the cost of your hard-earned income, didn’t they?
Now, each month, you find yourself borrowing money from friends just to get through the last few days.
What started as an occasional shortfall has now turned into a pattern—a cycle of lifestyle inflation and debt that leaves you feeling frustrated and trapped.
You know you are having problems with managing money. But you couldn’t understand what was happening.
The problem isn’t about how much you earn; it’s how you spend your money. No matter how high your salary is, without proper financial discipline, you will always struggle to make it last.
Impulsive spending, mindless UPI payments, unchecked expenses and lifestyle inflation drain your finances.
By setting a budget, tracking your expenses, and making intentional choices, you can break free from this cycle and transform your financial health to build a stable future.
Here, we will discuss everything about financial discipline, from definition to a step-by-step guide to building a financial plan.
Financial planning is the process of analysing your financial condition and taking the necessary measures to improve your financial situation.
Financial planning and management involve a lengthy process of developing a budget, assessing risks, evaluating short-term and long-term goals, and developing strategies to achieve those goals.
However, developing a financial plan is not enough to achieve financial success unless you follow it consistently, as it focuses on improving overall financial health.
A detailed financial plan can help you track your expenditures and manage your salary efficiently. By contributing to your needs and wants, you can start planning how you want to spend your income.
Financial planning and management are important to take control of your financial condition. It helps to foresee any expenses as well as prepare you for any unexpected circumstances. It allows you to effectively manage your expenses without having financial setbacks.
Financial planning allows you to categorise your expenses according to your financial goals. It will allow you to control your spending by setting aside your expenses for long-term needs. This helps you stay track of your financial goals and manage your salary wisely to achieve those goals.
Creating a financial plan involves gaining financial literacy, assessing your financial condition, and implementing strategic measures to resolve any underlying issues and improve your financial health.
As mentioned earlier, a financial plan varies from person to person. However, we will provide a detailed guide to creating a basic financial plan that covers all essential aspects of life.
Analyse your financial condition by calculating your income and expenses. Determine whether your expenses outweigh your income or vice versa. Evaluate your liabilities, assets and all the resources to get an overall understanding of your financial health.
Once you evaluate your financial health, take strategic measures to improve it if required. Focus on implementing wealth planning strategies to strengthen your financial condition.
If your financial situation is stable, maintain disciplined financial habits while exploring growth opportunities through investments, savings, and other means.
Determine your goals by evaluating things you want to achieve in your life. Break down your goals into short-term, mid-term and long-term based on the time horizon you want to achieve them.
Align your goals with your investment plans, retirement plans, budgeting and others. Prioritise your goals based on urgency, importance and feasibility. Ensure that you make smart goals (Specific, Measurable, Achievable, Realistic, and Time-bound).
List down your goals in your financial plan. Determine how much you need to contribute to fulfil these goals. Once you figure out the exact amount you need to contribute, then you can easily find the right investment and saving instrument to generate wealth to fulfil your goals.
An emergency fund consists of 5–6 months of living expenses. Before you begin contributing to your long-term goals, you should establish an emergency fund by saving a portion of your income each month. Estimate your financial situation to determine how much you require to contribute regularly to build an emergency fund.
As the name suggests, emergency funds are built to be used for the unexpected emergencies that life throws at you. Emergencies can strike at any time. Whether it is an accident to you, someone else or anything that requires your financial assistance.
In such situations, an emergency fund can help you avoid using the funds that are being used for fulfilling other financial goals. Therefore, build an emergency fund by contributing every month.
Prepare a budget plan to regulate your income. Categorise your expenses into needs, wants, savings, debt and others. Follow a budget rule to categorise income into each expense efficiently.
Set a budgeting rule as per your financial conditions. Common budgeting rules are 50-30-20 or 70-20-10. Make sure that your budget includes expenses that are included in your financial plan.
If you have needs, wants, debts, and investments, make sure to include all relevant factors in your budget plan.
Ensure you regularly contribute to each of these expenses on the day you receive your income. Delaying deposits may lead to emotional conflicts, resulting in financial mismanagement.
Therefore, make sure you always stick to your budget plan so you can save money from salary and allocate it wisely to your expenses.
The main purpose of creating a financial plan is to find ways to monetise and optimise your income. Saving and investing are the best ways to accumulate wealth in the short term as well as the long term.
Get your savings and investment plan into action. Start by regularly contributing to your savings and investments as per your budget. Open a savings account to accumulate your savings. Also, select investment vehicles that have potential and stability over the long term.
Whether you’re planning to build a house or retire early, regularly saving and investing can help you grow substantial wealth over time. A well-structured plan ensures consistency and long-term financial success.
Early investing and saving can help you take advantage of compounding power and the rupee cost average to overcome market fluctuations.
If you have a clear investment and savings plan, you can secure your funds and gradually build your wealth with confidence.
Without effective tax-saving strategies, your overall income and investment potential may decrease. Poor tax planning can lead to lower savings and higher liabilities and impact your long-term wealth-building plans.
Many individuals often pay higher taxes due to a lack of awareness about potential tax deductions and exemption methods.
Effective tax-optimising measures such as tax deductions, investing in tax-saving instruments, tax benefit allowances, and leveraging retirement funds can help maximise tax savings.
An effective tax strategy guarantees long-term financial growth, which maximises tax savings. By maximising tax efficiency, you can focus on increasing your wealth accumulation.
An insurance plan is a policy that protects individuals against financial losses during life-threatening accidents, illnesses, etc.
Several people delay getting insurance because they are unaware of the best plans and are concerned about the cost. On the other hand, young people avoid getting insurance because they believe they are healthy and do not need it.
As a result, these conflicts often lead to financial strain during unexpected emergencies.
Therefore, having the right insurance plan reduces financial stress during emergencies and allows better long-term planning.
A good insurance plan covers multiple benefits from healthcare expenses, capital protection, investment opportunities, and tax benefits.
Ensure that you choose the best insurance plan that supports your financial condition.
A successful financial plan is a long-term process of regular monitoring and reviewing to assess that your financial goals align with your plan.
Regular monitoring allows you to make necessary changes by identifying missed opportunities, inadequate coverage, or an outdated strategy.
Lack of proper assessment of your financial plan may lead to poor asset allocation, irregular budgeting, and missed tax savings, which may create a gap in your long-term wealth creation.
Set a major schedule to manage your financial plan effectively. Rebalance your income and investment portfolio by aligning your financial goals with major life changes.
Ensure that your investments, savings, tax efficiencies, and strategies remain updated and effective.
By implementing the right solution to your financial plan, you can avoid financial inefficiency, minimise risks, and ensure your long-term financial plan remains active and healthy.
Financial planning is carried out by evaluating an individual’s financial condition. So each financial plan differs from the others and is catered to personal needs.
For instance, a young person might prioritise investing, an elderly person might prioritise tax savings, and a working professional might prioritise early retirement.
Therefore, the financial planning for these individuals varies with their special needs, such as investment, retirement and tax planning. Furthermore, a financial plan can include a variety of planning strategies.
Explore the different types of financial planning and incorporate the type that suits your financial condition.
Investment planning is the process of creating an investment blueprint that includes the type of investment you want to make, the amount you want to invest, the duration, and other details.
If you are planning to invest, draw a proper investment plan with the right investment strategies, aligning with your goals.
It provides clarity on how much you are investing in what assets. This will help you track your investment portfolio and make tactical asset allocations with the evolving markets.
Real estate planning is important to define your objectives and budget when you are buying a home or investing in real estate.
Strategic real estate planning is required to generate income. Manage it effectively by keeping up with property taxes, the real estate market, and regular maintenance.
Business planning is specially designed for entrepreneurs to run their businesses successfully. Each business plan is catered to industry needs.
Effective business planning can help companies stay focused on their objectives while adjusting to the shifting market. It can also support operations and growth.
Debt planning is the practice of developing a plan to clear the ongoing debts in the future.
Not everyone has debt, but it is crucial to learn how to manage it effectively, just in case.
If you have debt, you can start by writing down how much debt you have and how much of your income is required to clear the debt.
This will give you clarity on how much to allocate for other expenses while prioritising debt.
Ensure that you clear your debts without any penalties. Also, practice debt management strategies to manage it effectively.
Education planning is something that every parent and student should practice.
Unlike other plans, it focuses on building a financial budget for you or your child’s education.
Education planning aims to avoid the burden of financial stress of pursuing education in modern times.
So that you or your children can pursue and complete education without requiring an education loan or financial complications.
Retirement planning is long-term planning that focuses on retiring at an early age to enjoy other purposes in life, such as travelling, starting a new business, spending time with loved ones, or any other thing that you love to do.
Start retirement planning early by estimating your post-retirement expenses and determining how much you need to save daily to reach that target amount. Create a plan and regularly contribute the said amount to fulfil the retirement goal.
In addition to that, there are lots of planning structures, such as real estate planning, insurance planning and others. Individuals can choose the type of planning based on their goals and blend financial planning tips for effective management. Having multiple financial plans can pave the way to becoming rich in the long run.
There is no timeline to create a financial plan. The sooner you create a financial plan, the quicker you have the possibility of achieving financial goals. You can start creating a financial plan now based on your needs, such as child planning, investment planning, education planning and others.
You do not need a big investment to start financial planning. Financial planning is a long-term strategy that allows the accumulation of wealth gradually to make a significant amount of wealth. Begin by following your preferred budget rule and making a small contribution.
A financial plan is necessary to develop financial discipline. It helps to give clarity and focus about your financial situation and resources available to grab opportunities or face emergencies. A financial plan is an absolute necessity to remind you about your goals and long-term plans to achieve financial security.
Yes, you can achieve financial independence early if you start your financial planning at an early stage. Following a financial strategy like FIRE (Financial Independence Retire Early) can help you begin aggressive saving and investing to achieve financial independence early.
Now that you have completed reading “What is Financial Planning?”, you will have a clear understanding of it and how it can help you build generational wealth. Gaining knowledge about financial planning is the first step towards building wealth.
Creating a well-structured financial plan involves assessing your financial situation by evaluating your income and expenses, setting goals, developing a budget, strategically allocating resources to savings and investments, and other required fields.
In addition, you can include debt optimisation and other investment plans such as real estate plans, enterprise plans and others based on your requirements. Remember to build an emergency fund, take an insurance plan, and optimise for tax efficiency. These are crucial for the financial plan to remain active and avoid financial losses.
More importantly, regularly following the financial plan for rebalancing is critical to ensuring that your evolving goals are aligned with your financial situation. Maintain discipline and take proactive measures to make sure that your savings, investment, and risk management strategies remain effective with changing market conditions, career advancements, as well as unexpected emergencies.
Hence, you can steadily progress towards financial independence by being consistent and making informed decisions.
Disclaimer: The information provided in this blog is for educational and informational purposes only and should not be considered as financial or investment advice. Stock market investments are subject to market risks, and past performance is not indicative of future results. Readers are encouraged to do their own research and consult with a licensed financial advisor before making any investment decisions. The author and publisher are not liable for any financial losses or damages incurred from following the information provided in this blog.
Hashim Manikfan
Hashim Manikfan is a professional financial content writer with extensive experience in creating engaging and informative articles on a wide range of financial topics. With academic background in Communication and Journalism, Hashim has published numerous articles aimed at educating readers on essential financial principles. His work covers areas such as financial markets, investment strategies, economic trends, and more. His writing style ensures complex topics are accessible and interesting, making financial literacy attainable for a broad audience.
