decade has undergone a sea change in thinking patterns
with regard to personal wealth management. All households
is facing inflation and shifting patterns in speeding
with altering lifestyles. Along with the need to keep
up with life style expenses comes another need, to manage
finances so that one is prepared for expected and unexpected
personal household finance has to be planned
in a focused manner, with distinct targets and goals.
There is a vast choice of investment options rendering
a novice confused and lost.
is where a financial planner can help.
financial planner will appear at every issue with a
balanced perspective and draw a financial plan, which
suits your personal and family needs. But before you
go to a financial advisor there are some fundamentals
of private financial planning which you have keep with
balanced plan must take care of three main aspects.
and asset management
will look at these in detail. To be financially strong
just should have an excellent planning. To plan well,
your requirements must be clearly spelt out.
of all it is necessary for every household to know that
the one who budgets is not a miser. It need not mean
that you must compromise on many things and be stingy.
Itís not all about thrift. To put it only, budgeting
is just allocating your income in different areas in
such a way that the whole picture of income and expenditure
becomes clearer. After that you can reallocate and make
changes so that there is scope for flexibility in your
budgeting. This means you simply avoid unnecessary expense
and wastage. It means successful source management.
When you budget you can have extra cash to use since
it is a considered payments. The values behind it are
spending 4 when you can get for 2. Or why buy 4 when
2 are sufficient.
with a notebook and calculator. When you begin noting
monthly fixed cost, the results are amazing. You will
discover simple ways of saving. Make extra meals at
home. Slash back on extra cups of coffee. Cut down on
buying periodicals. Things which done easily does not
require at all kind of significant difference in your
me give you an example.
businessman who produces tyres needs to get some tubes
and has all the facility for making them at his end.
He has two options - he can make them himself or get
them made. But he has a budget where costs must not
go beyond a certain limit since it would mean the cost
of the tyre would go up. He finds out that the cost
of making tubes is higher than getting them made elsewhere.
So he gets them made and saves money.
wise decision, as every businessman would agree.
you apply this attitude to your personal financial circumstances,
the same thing happen, and save a lot of money. The
rule is ĖThere is a better way of doing everything,
by making your financial goals.
them realistic and not impossible probabilities. Your
financial advisor will just make a budget with all your
income and expenses heads and then advise you how a
great deal you can spend under various heads.
we move on to saving which is a major part of budgeting.
In fact saving is the outcome of budgeting so is sure
to acquaint yourself with all the avenues where savings
can be put in. Saving brings up the issue of investing
which is the next point. We would go into that later.
the story of the ant and the grasshopper?
our salaries come with inbuilt saving schemes like the
Employees Insurance plan and the Provident Fund to name
a few. So one doesnít really have to be an ant toiling
away, not having any fun. But nor do we want to be a
person who runs up a big debt and then asks for loans.
That is why we save and saving is a core activity and
one strategy to avoid crisis is to put aside 5 to 10%
of your income before paying bills.
down your savings goals and give time frames. This will
motivate you to save. It is only when you have made
a budget and then chalked out a saving plan that the
issue of wise investments crops up.
has a lot to do with your mindset. What you're looking
at could be the keyword for your investing avenues.
If it were prosperity formation, then property and retirement
planning would be top of the list. If it is regular
returns at different stages of life then itís life cycle
management you want, and you would be checking out fixed
term deposits. And if itís big returns, the stock markets
are for you.
prudent item to do is to have a blend of these and then
depending on your priority the amounts that you allocate
are to be determined. That is what you did in your budget
plan and financial advisor can tell you the best option
from the plethora of products available in the market.
and Asset Management?
and asset management is not only for the rich. Even
if you are living from one salary to the next one it
is possible. What is important is to know what you want
and where you want to be. Success management helps to
create assets and capital that will last through your
retirement and more. For this you would first require
to recognize what is your net value. Simply set, your
net worth is the value of all your belongings less value
of all your liabilities. Your assets contain income,
savings, investments, property, gold and so on while
your liabilities are the annual fixed cost, taxes, loan
repayments and so on. The difference is your net worth.
must have a strategy for creating wealth. Dream of the
farm and the plot and have that goal in place. Then
work towards it. It is not enough to have a good income
and deposits. Land is a scarce commodity. Investing
in real estate and property creates real wealth. Your
consumer goods will not create wealth for you with the
help of household finance.
Your property will.
retirement and saving schemes combined with property
are your wealth. See that you have all three planned
for. Include your house in your assets but try and have
some property as pure investment. This disposable property
can bail you out in a crisis. The best time to start
is now while you are earning.
you are build assets you can take a look at risk management.
care of medical and early retirement risks by taking
proper insurance. Insure yourself for your net worth
and for your family needs with a suitable insurance
plan. Your insurance plan is a wealth creation tool.
You increase your asset value by the amount of your
insurance. All in all by a focused approach and the
drive to achieve your goals it is possible to be the
wealthy person you always wished to be.
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