What is Financial planning?


Financial planning is a broad term and investing is just a chapter in it. Financial planning is all about listing down all you sources of finance, assessing your financial needs for the future, assessing your appetite for risk and then charting a plan to achieve your dreams. It also involves planning for your child’s future , your new home, planning for tax and retirement. So, it’s a very broad term and you might need an expert to draw it for you.


When you chart your financial goals for the future, it important to classify them into short term goals and long term goals.  A short term goal is anything that needs to be done in , say , 5 years. For example – buying a 3 BHK flat. Any financial goal like your son’s higher studies or your daughter’s wedding which has ample time left to think and plan, can be said to be a long term goal


..But still, the importance of financial planning needs to be emphasized in today’s world. Today, the work pressure is so high that people want to opt for early retirement from their full time jobs, preferably in their mid 40’s or early 50’s. They have realized the importance of living their life to the fullest. Thanks to advancement in medial sciences, the average life expectancy has increased to 70 or 80 which means that a person who has retired at 50 has another 30 years to live, without depending anyone  (Preferably!).

Financially, this means  that during you working life, you should create wealth enough to help you maintain the same standard of living after you retire and also take care of your medical expense which keeps going high as you get older. Planning for all this is definitely a difficult and disciplined task. Such a target  is not easy to achieve and it requires meticulous planning and disciplined carry through. That’s why financial planning is so important.


May be or may be not. That depends on who you are. A financial planner is a person who is an expert in his field. It’s better if you can consult a financial planner because even though it’s possible that you are well versed in finance; you’re still not a financial planner. A planner will be able to analyse of your current financial situation quickly and suggest   recommendations that are right for you. There are also personal finance magazines and self-help books to help you do your own financial planning. At the end of the day – the right amount of money should be at your disposal at the right time.

Seek the services of a financial planner if:

  • You find it difficult to analyse your risk profile. Most of us are not fully aware of where we stand in terms of risk.
  • You don’t have time to do your own financial planning.
  • You want to take a professional opinion about the financial plan you have done.
  • You think that you should improve your current financial situation but still don’t know where to begin and how to implement those changes.


All right, anyway I don’t have much money to invest. What’s there to plan? If you’re thinking on these lines, you’re wrong. People with limited income should definitely plan you finances – at some point of time you need to get married, buy a home, raise children and look after your ageing parents. The rich will always manage all this even if they haven’t planned their finances properly. But if you’re from a middle class background, you just cannot ignore financial panning.

Basic financial planning is not so complicated. If you have loans first pay them off at the earliest. Loans will anyway carry a higher rate of interest. Be debt free. That definitely is the first step. Then , think about how much you can save. Start a recurring deposit. Accumulate small amounts fro your monthly income even if you have to live on a shoe string budget. Two years down the lane, you’ll find that you’ve done a good job accumulating some money. Once you have some cash, start a systematic investment plan. Take insurance policies. Buy gold when ever you can, even if it is a tiny piece. You’ll be on your way …

You may like these posts:

  1. Why is investing important?
  2. What is investing?
  3. When should you start Investing?

4 Responses to “What is Financial planning?”


November 3, 2012 at 4:26 am

Nice article! Do you have list of professional financial planners for NRI that you recommend or source where I can look for one? Thanks!!

J Victor

November 4, 2012 at 7:55 pm

Hi Mr. patel,

Sorry to say that We do not have such service.

Krishna Nimesh

April 16, 2016 at 2:28 pm

Dear Jins,

I am working in Kochi Refinery, Ernakulam, Kerala. I am very new to this world of financial planning. I have read almost your all articles and I must say all of them are best from other. But I am very confused, how to start. I have started investing little in SIP, but I think that’s not enough for my goals to achieve. Kindly help me in this matter. I can meet you also in person if possible.

Krishna Nimesh

J Victor

April 25, 2016 at 8:21 am

Nice to know . send me a mail about your finances and goals. May be o can suggest how to go about planning it …

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