Financial Planning is a comprehensive evaluation of an individual's current financial state and planning the future financial state which may include retirement planning, goal planning, insurance planning, estate planning and tax planning.
It is an ongoing process which involves using current variables to predict the future income, asset values and withdrawal plans.
Your Financial Plan may include your short or long term goals, plan of putting will in place.
Retirement Planning refers to the allocation of savings or revenue for retirement. The goal of retirement planning is to achieve financial independence.
It is an important aspect which every individual should plan for to do. Retirement planning secures you financially after your retirement when there is no other source of income.
You can maintain your desired lifestyle by properly doing the retirement planning.
Insurance Planning is an important part of financial planning.
Insurance Planning is to protect yourself, your family, your loved ones. your home, your assets against any unexpected events.
Insurance Planning can financially protect an individual and his/her family/assets by replacing the income as planned. It may take care of expenses in case of any hospitalization, or any critical illness, or any disability.
Estate Planning is the process of anticipating and arranging, during a person's life, for the management and disposal of that person's estate during the person's life and at and after death.
It includes planning for incapacity as well as a process of reducing or eliminating uncertainties over the administration of a probate and maximizing the value of an estate by reducing taxes and other expenses.
Estate Planning may involve will, trusts, etc.
Tax Planning is also an important part of financial planning which takes into account minimizing your tax liability by making use of available allowances, exemptions, rebates, deductions over a financial year. It is a legal way of reducing your tax liabilities.
Tax exemptions can be u/s 10, deduction u/s 80C. The most popular methods u/s 80C for saving tax are investing in PPF accounts, National Saving Certificate (NSC), Equity Linked Savings Scheme (ELSS), National Pension Scheme (NPS), Insurance Schemes.
Goal Planning is like setting financial goals. It becomes part of the comprehensive financial planning.
Goal Planning may involve planning for child's higher education, child's marriage, vacation planning, new car planning.
Goals can be either short term or long term. Your goals may be in your pre-retirement stage, may be in your retirement stage, or during your mid-life. It may be a goal of buying a house, say, 10 years from now.
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