10 Tips on How To Make a Financial Plan Without an Advisor

Financial planning might feel like a herculean task. However, it is not as complicated as most financial experts would like you to believe.

Let us look at ten tips to make a financial plan without consulting a financial advisor.

  1. Set Financial Goals - The first step before making any financial plan is understanding your financial goals. Make specific goals like how much money you want in an emergency fund when you want to withdraw money from your savings for a home purchase, etc.
  2. Protect Your Wealth - The inflation rate continuously erodes our wealth if we do not invest it wisely. Find safe investment options that will give you a risk-free return at least higher than the inflation rate.
  3. Have an Emergency Fund - No financial plan can be complete without an emergency fund. Make it a point to invest some portion of your salary each month in an emergency fund until it has enough money to sustain your current lifestyle without any income for at least nine months.
  4. Get Insurance - Life and health insurance are crucial components in any financial plan. While these are not investing instruments, they indeed do protect you in case of emergencies.
  5. Automate Investing - Sticking to a financial plan is all about consistency. Subscribe to a SIP that automatically invests your money each month as soon as your paycheck arrives to protect you from missing out on your financial goals.
  6. Make Use of the Tax Deduction Under Section 80C - Section 80C allows you to invest some money without paying any taxes both the principal and the interest earned. PPF is a great tool to invest money that is tax-deductible under this section.
  7. Keep a Separate Fund for Retirement - Financial planning should also have a long term angle. Even if you are at the beginning of your career, you must have an investment fund with no plans to withdraw.
  8. Save Separately for Big-ticket Purchases - We often end up spending so much money on small purchases randomly that we never seem to have enough money for a big-ticket purchase like a vacation or home renovation. Make sure you have separate savings account that you add to each month and use only for big-ticket purchases.
  9. Diversify - A sound financial plan has funds diversified across asset classes to protect oneself from unforeseen circumstances. You could diversify your portfolio with some safe investments like fixed deposits and PPF, some volatile investments like mutual funds, stocks, and some other assets like gold and real estate.
  10. Review Regularly - There is no single financial plan that works for everyone. Your financial plan is something personal and specific to your financial needs. Understand your financial goals, risk appetite, objectives, and review your financial plan regularly accordingly.

With a basic knowledge of your finances and some of your country's investment instruments, you can easily manage your personal finance on your own.

Sakshi Mehrotra

Sakshi Mehrotra