Friday, May 24, 2024
HomeFinanceFinancial Planning for Individuals: Basics Details and Importance

Financial Planning for Individuals: Basics Details and Importance

Financial planning for individuals helps you to build a road map to your life goals and keep aside the emergency fund to meet unforeseen needs. Saving in a bank account, FD, or RD is not enough for financial planning. This only saves a little amount from your earnings but is not sufficient for meeting your big financial goals like a dream vacation, owning a house, a children’s higher education, etc. For these goals, you need to make your money work for you.

What is Financial Planning for Individuals?

Financial planning of an individual is a way to evaluate the current and future status of an individual and thereby enabling them to achieve all their goals systematically. Financial planning of individuals includes budgeting expenses, Investing in the right assets, setting SMART goals, making retirement plans, financial advisor for individuals, and saving enough.

Under financial planning individuals invest their savings for making more money with it or to generate extra income.  While making financial plans, the financial advisor first evaluates your goals and assesses your cash flow, then allocates the funds.

Basics of Financial Planning for Individual

There is some basic aspect involved in financial planning individuals. Let us learn about them:

1. Defining Financial Goals

The ultimate objective of financial planning for an individual is to achieve financial goals. Start listing your goals and divide them into short-term, medium-term, and long-term goals. Make financial goals specific, measurable, adjustable, realistic, and Time-bound.

2. Start with Making a Budget

Budgeting is creating a balanced formula to make optimal use of your money. It is an itemized summary of your anticipated income and expenses which keeps your expenses in control and keeps a check on debts. To make financial planning for individuals easy, you can use the online software available online or make it on MS Excel.

3. Keep Aside the Contingency Funds

Setting aside contingency funds is one of the important factors in financial planning for individuals. These are the emergency funds that you can use when any unforeseen situation arrives. Contingency is the 6 months of living salary. This includes all the expenses like EMI payments and other expenses.

4. Asset Allocation

Asset allocation is the key to the successful and effective financial planning of an individual. A perfect mix of equity and debt will help reach your financial goals. Sometimes, investing very low inequity can lead to bad portfolio growth and you become incapable of meeting inflation.

5. Review your Financial Plan

Reviewing the financial plans regularly enables you to find out if there is any problem occurring in the portfolio and what changes you must make to solve them. Regular reviewing helps you to analyze if the investment will take you to your goals or not. Hence, You must review your plans regularly and weed out investments that are no longer beneficial.

Importance of Financial Planning for Individuals

Financial planning for individuals is not only important for those who have lots of money or who have little money. It’s for every individual to make full use of money and meet their goals.

1. Plan your Retirement

The financial planning of an individual enables you to plan your retirement and live a life stress-free. People nowadays are finding it hard to save enough for retirement because of many expenses waiting for them. Financial planning enables them to meet all their expenses while saving for retirement.

2. Make Dreams Come True

Do you also have big dreams like owning a big house, car, or a dream vacation? If yes, then financial planning can make your dreams come true. Financial planning individuals can help you plan your finances properly and get hold of your dreams.

3. Make your Money Work

Earning and saving are not sufficient to meet your financial goals. Financial planning individuals enable your money to work for you and increase your earnings by many folds. Investing your money into the right assets and getting a high return is the main objective of financial planning for individuals.


Financial planning of an individual is what gives you satisfaction in life and provides you with stress-free living. When you know you can meet your financial goals, you stay tension free and live happily.

Financial Planning for Individuals – FAQs

Where can I get assistance with financial planning?

Ans. Financial planners can help you plan your finances properly. You can hire a financial advisor.

I earn Rs.35000 per month. How can I plan my finances?

Ans. Finance planning is all about investing what you save per month. So, learn to invest your savings in the right assets and start financial planning.



Please enter your comment!
Please enter your name here

Recent Posts

Most Popular