There are many financial decisions and activities that we undertake. It will work wonders if we start prioritizing them and work on them in that order. Set your financial priorities as per what you value the most, because that will make you who you are.
Here are the top 12 financial priorities shared by our clients.
1. Living within our means
This is crucial and tops the charts We are constantly told to live within our means and not look beyond. As is the famous saying;
“Don’t go Broke trying to Look Rich, act your Wage”.
Financial planning will help you understand your means and how you can live a rich life within your means.
2. Protecting ourselves with adequate health and life insurance
A constant cause of our worry is, are we adequately insured? Life insurance and health insurance differ and among the two, which option to choose is difficult. This is because the inflation rate for medical expenses is different from our food and retail inflation. We all know life insurance is important. But the question remains is how much is important? Financial planning is the guide providing the answer about insurance adequacy.
3. Understanding our financial goals
Dream big to lead an accomplished life. Dreams encourage us to set our financial life goals and we strive to fulfil them. Dreams can only be shaped into reality by wisely planning our financial life. Financial planning strengthens one’s dreams.
4. Communicating with family about finances
We tend to ignore discussing about our financial decisions with our family. The primary reason is hesitation, hence we avoid sharing our financial plans with the family. Let go of this fear and start communicating as it will strengthen your bond. Family plays a crucial role when it comes to financial planning as suggestions from elderly are well appreciated and beneficial in make sound financial decisions.
5. Having a debt payoff plan
I have bought everything on loan right from my laptop to a trip to Maldives, I don’t know the actual amount I owe to clear all the debt. Before I run into bad debts, very quickly I need a payoff plan. A financial plan will clear of all my debt worries and ensure some monetary gains as well. These gains will ensure prevention of taking too many loans in the future.
6. Planning finances for post retirement
Another crucial priority which we ignore till it’s too late. During our early ages of our work life we are so engrossed with earning that we completely forget the fact; That one day we won’t be working anymore and there will be no money inflows. This reality hits brutally when we are nearing our retirement age and we haven’t saved enough for our retirement age. If can we start financial planning from our early life, we can accumulate enough money and not worry much about post retirement.
7. Understanding finance terminology
I want to invest my hard-earned money into mutual fund but I fear losing my money. I don’t understand the financial terms like ‘Time value of money’, Risks of investing’, etc. The concepts are too complex for me to understand, which prevents me from investing money for growth. Here are some critical ones-
- Time value of money means money is worth more today than in the future. Money is valuable today because of the interest it earns over a span of time in future. The interest is the return amount which a person gains in future for not using the money today.
- Risks involved in investing refers to the financial risk of uncertainty of not getting money back and losing the money invested. There are various types of risks involved and a good financial planner explains them properly.
8. Spending wisely
Spending wisely is another important priority which can be done with effective planning. Effective financial planning ensures good future returns for all the spends.
9. Combining financial planning with tax returns
Tax is an unavoidable entity which we are bound to pay to government over our lifetime. A lot of our clients use this time to get hold of a financial planner and look at their complete financial picture.
10. Safeguarding financial documents
To keep a track of all my financial investments in the form of documents is too cumbersome these days. Arranging my insurance papers, bank savings document, etc. and keeping it safe is an important and necessary activity.
11. Performing regular financial check-ups
How often after we invest our money we review our investment plans? There is a need for a constant revaluation of our financial plans, as it helps in better planning. Regular reviews ensure that our investments are aligned with our spending requirements. So, it is important to constantly keep checking up on our financial planning.
12. Taking advantage of NPS schemes/ programs
National Pension Scheme (NPS) is a fund which encourages saving for post-retirement years. In January 2004, it was launched by the government with the objective of providing retirement income to all the citizens of India. Investing in NPS scheme from an early age offers tax benefits of upto ₹ 2 lac. Since, it is a government offered fund, it is transparent and one can track every penny invested.
Each one of use has one or the other financial priority at different stages of life. And, we all deal with it differently. Financial planning will help straighten out and even discover our priorities. All you should do is ask yourself, “What’s my priority?”