Main Zindagi Ka Saath Nibhata Chala Gaya, Har Fikr ko dhuey mein udata chala gaya

Great for your ears, terrible for your finances.

So how should you ideally manage your financial life :

1. Articulate your life goals – Each one of us has a different list of priorities in our life, our personal vision statement if I may call it that. For one of us, it may be spending time with family at that lovely house by the seashore, for another providing his or her child the best college education that money can buy, and for someone else supporting street children and enabling them to become truly independent. If you don’t have your life goals clearly articulated yet, its time to think about them deeply.
2. Align your life goals with your finances- Whilst some of your life goals may not have any linkages to your finances, a large number of them normally do. For example, if your goal is to support street children to become independent, are you sure that you are financially free yourself and can retire comfortably? It is critical to put a number to each of these goals basis your own expectations. Do not forget the impact of inflation on these goals – Rs 40,000 per month that you spend today could be in excess of Rs 2,50,000 in the next 25 years. You may need to seek the help of a financial planner to do this exercise.
3. Rank the goals in order of importance – You will probably find that achieving all your goals may not be possible, so a process of prioritization may need to be undertaken. Try to achieve a balance between short term and long term goals. Too often excessive focus on short term goals or any one of the goals tends to compromise your overall financial wellbeing. For example, over stretching yourself on your annual holidays each year could result in a compromise on your retirement.
4. Manage the risks – Current lifestyles could expose you to health risks, life threatening or otherwise. Ensure that you have adequate life and health cover to insure your risks. Buying them early increases the chances of getting them cheaper as well as when you are in a good state of health. The gap between needs and funds can always be funded by insurance.
5. Diversify your portfolio - Use a combination of financial instruments – stocks/ equity mutual funds, bonds, precious metals, real estate and bank deposits in line with your financial goal requirements and risk appetite. The products that you buy should be aligned to deliver to your financial goals for eg avoid buying equity for a short term financial goal where you are likely to need the money in a year as equities can be very volatile over short periods. Similarly, using a 100% fixed income portfolio, though very safe, can result in your portfolio value not being able to match up with inflation.
6. Put the plan into action – Implementing a plan that is reasonably accurate is better than not implementing a perfect plan. There is a tendency to put off the implementation of the plans and then try to make up lost time by investing too aggressively. This may not be an appropriate strategy.
7. Monitor your portfolio regularly – It is extremely critical to monitor your portfolio and financial plan annually. There is a high probability that some of your life goals change along the way and your financial plan may need mid course correction. However, be careful that you don’t check your portfolio each day, as that could do you more harm than good.
As the saying goes – “Those who fail to plan, almost plan to fail”
Avoid making a verse of this wonderful song your financial plan – “Jo mil gaya usi ko muqaddar samajh liya, jo kho gaya main usko bhulata chala gaya”

Na Jaane Kyon hota hain yeh zindagi ke saath, achanak yeh mann, kisi ke jaane ke baad, kare phir uski yaad, chotti chotti si baat.

 
Plan Ahead Wealth Advisors