Do’s of financial planning - 10 Excellent tips to get started

Understand your future as well as your present financial requirements, and on its basis, plan a suitable budget.

It will help you stick to it. Do not cheat your budget if you want your financial plans to be successful.

The basic thing is that you need to save a significant amount every month.

Before you plan a budget for your expenses and lifestyles, pay an amount to you first.

How you use your paycheck will determine your future financial wellness.

Set an automatic deposit into your savings account from your paycheck every month.

Once you start getting increments and your salary increases, you can delegate a portion of your paycheck into multiple accounts.

You don’t know when rain will start; but, at least you can stay alert if you follow the weather forecast.

However, financial emergencies can occur even without a forecast. So, you need to be financially prepared for the emergency.

Therefore, create an emergency fund and deposit a monthly amount.

The financial advisors say that you need to plan for your retirement right from the month you have your first paycheck.

So, don’t delay your retirement planning.

If your employer is offering a matching contribution in a 401(k) account, start saving for your retirement days.

You can also open an IRA (Individual Retirement Account). If you’re opening a Roth IRA, you need to pay tax now, but you won’t have to pay tax at withdrawal.

Just like having an emergency fund, you need to have coverage against unforeseen circumstances.

So, talk to an insurance agent and purchase suitable coverage plans of health insurance, life insurance, home insurance and automobile insurance - to name the most important ones.

However, you should also be aware not to overpay. So, assess the risks and go for the adequate coverage and amount.

Diversifying will help you reduce your overall risk of return. So, mix your mutual funds, multiple stocks, etc. in your investment portfolio.

Buying stock from one company will put you at a greater risk in comparison to investing in stocks of multiple companies. Doing so, you can offset a loss by making a profit from other companies.

It is very important to have complete and accurate knowledge about financial products.

You should also know about the risks associated, tax implications, probable return on investment, the rate of interest of loans/credits, and so on.

This will help you plan your financial moves carefully.

No financial plan is perfect and you may have to make changes from time to time.

So, make it a point to revisit your financial plan. At least, check out your financial planning with the major changes in your life - like marriage, the birth of children, etc.

Revisit your financial plan to make sure they are still relevant, and if not, then you can make necessary modifications. Doing so, you also have a track to achieve your financial goals on time.

Whenever you make any financial move, check out the pros and cons of doing so.

You should be aware of the changes it may make to your financial planning and whether or not you can handle them correctly.