The Ultimate Financial Planning Guide for Beginners

Financial planning can look intimidating for young people just starting their careers. When you get your first job, the independence feels surreal initially. Still, even then, it is essential to start planning your finances early. Otherwise, you will soon begin to dread the end of every month when you are short on cash.

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Beginners often want to plan their finances but don’t know where to start. Financial planning can be a complex exercise, but all you need to do is take care of a few key points when you are just beginning. You can also contact family wealth management services in the US, which can help you to simplify your financial life, protect your wealth, and allow you to enjoy life without the burden of financial problems.

  1. Expense – Those who complain about running out of money at the end of every month live beyond their means. Unplanned expenses eat into your salary, and before you know it, you find yourself struggling to make ends meet. At the beginning of every month, categorize your expenses and understand your spending pattern. Look for unnecessary costs that you can cut to correct your course.
  2. Budget – Setting a budget is an essential step in sound financial planning. It enables you to make wise spending decisions and gain better cost control. Based on your income and your estimate of essential expenses, make a budget for every month.
  3. Investment – How you deal with surplus cash also determines the efficacy of your financial planning. The most common thing to do with surplus cash is to save it in a savings account or fixed deposit account. The intelligent thing to do is invest your surplus money to grow wealth and counter inflation. The earlier you start investing, the better. There are various good investment options in India. You are sure to find a lucrative avenue to invest your hard-earned money.
  4. Insurance – When planning your finances, it is essential to factor in emergencies and risks. Everything from your life and health to your car and house is vulnerable to risk. Cover yourself and your loved ones against such dangers by buying life insurance and healthcare.
  5. Tax – Filing your taxes is not as hard as it looks. Plan your tax well by taking advantage of all applicable tax exemptions and deductions to reduce your tax liability. Tax planning should start at the beginning of every year to invest in tax-efficient instruments on time.
  6. Debt – If you cannot manage your finances well, you are likely in debt. Unpaid debts accumulate interest and are also detrimental to your credit score. Manage your debt well and pay them off as soon as you can to improve your financial position. Debt-free living is essential to build savings and grow your wealth.
  7. Retirement – As a beginner, planning for retirement may seem a bit farfetched – it is an intelligent way to plan your finances for the long term. As inflation rises, healthcare expenses rise too, and those who don’t plan for their later years may be in financial jeopardy post-retirement. Look for a retirement calculator online to determine how much you need to contribute every month to build a substantial corpus by the time you retire.
  8. Plan Your Estate – Your estate comprises your car, home, investments, savings, fixed deposits, and all your other assets. Draw up a list of beneficiaries and divide your assets proportionately among them. It could be a helpful exercise in identifying the ownership of things if you meet an untimely demise.

Paying attention to the points listed above is a great place to start your financial planning. In the beginning, financial planning for salaried employees is not very complicated. As your career and income grow, you can find new avenues to invest your money and grow your wealth. However, starting right is essential to living a debt-free life and building robust creditworthiness. Adhere to the rules given above to ensure that your financial planning is effective and sustainable.

Author Bio:

Aatish Khanna works with the Content Marketing team at Money Club – a digital chit fund platform that makes saving, borrowing, and investing your money more efficient. He writes on topics to help his readers understand processes so they can make better financial decisions. He’s the go-to person that his family, friends, and colleagues turn to for all their money matters. He loves to play board games and aspires to one day build his one finance-related board game and app.