List of Articles on the key Components of Personal Financial Planning

The main aim of is to provide unbiased information on various aspects of Personal Financial Planning. We have been publishing various articles covering the key components of a Personal Financial plan.

We encourage blog readers to go through various articles so that they can get a holistic view on their personal finances. Here is a compilation of important articles that cover the key aspects of Personal Financial Planning published over time.

The key aspects of a simple and basic Personal Financial Plan are;

  • Know what is your net-worth / current financial position.
  • Create an Emergency Fund.
  • Life Insurance planning.
  • Non-Life insurance planning.
  • Retirement Planning.
  • Investment Planning for other goals like Kid’s education, marriage etc.,
  • Estate Planning &
  • Tax Planning.

List of  Articles on the key aspects of Personal Financial Planning

Your current Financial Position : In order to get where you want to go, you need to know where you are now.  If an individual wants to evaluate his/her personal financial situation, based on the financial statements, considering the net worth or cash flow, or whether he/she has over-borrowed or has good liquidity, it can be determined by calculating Personal Finance Ratios. Kindly visit the below link to know more about the key ratios of Personal Finance.

Personal Finance Ratios Financial Planning Ratios pic

Emergency Fund Accumulation : One the important aspects of a personal financial plan is to ‘create and maintain an Emergency Fund. This can be to the extent of 3 to 9 months of your monthly living expenses. But, do not invest this fund in risky investment products. The main objective of maintaining this fund is to have ready cash to meet any unforeseen emergencies. (Related Article : ‘What is an Emergency Fund? Why, Where & How to save?‘)

best saving options for emergency fund pic

While investing / saving for an Emergency fund, you should give high priority to ‘safety of capital’ and ‘liquidity’. In case if your family has a history of Critical Illnesses, it is prudent to build a separate Contingency Fund for meeting any unforeseen medical emergencies. 

Besides maintaining some portion of your Emergency Fund in Cash, you also have to consider saving / investing in other avenues too.  Fixed Deposits, Auto-sweep-in Bank Saving Accounts, Liquid Debt Mutual Funds, Arbitrage Mutual Funds are some of the available options. Kindly visit below links to know more about these saving options.

Protection Planning – Life Insurance : If life is ‘unpredictable’, insurance can’t be optional. If you are an earning member of your family, have dependents and/or have financial liabilities/obligations then you SHOULD have adequate life cover. You can plan to get atleast 10 times of your gross annual salary as the minimum sum assured on your life insurance policy. Based on the changing personal financial profile, you have to enhance your life insurance coverage. Kindly visit below links to know more about importance of having sufficient life cover.

Protection Planning – Non-Life Insurance : If you are an individual with no financial dependents then Life insurance cover can be an optional thing. But non-life insurance plans like Personal Accident Plan with permanent & temporary disability benefits and Health Insurance plan are a must.  

Also, Home Insurance is probably one of the most neglected kinds of insurance in our society. It is estimated that less than 1% of the people who can afford it have home insurance in India. We strongly believe that Property insurance is important and essential.

Kindly visit below links to know more about non-life insurance plans.

Investment Planning : The probability of achieving your financial goals (short, medium or long term goals) depends on how well you plan your investments. You have to start your investment plan by identifying your goals first and then select the right investment avenues based on your investment horizon. Your goals can be retirement planning, Kid’s education goal and other accumulation goals. Visit below links on investment planning.

Retirement Planning : Retirement is one of the most important stages of your life for which you work and should save for. If you are creating an Investment Plan, your top most priority should be to save and invest for your retirementDo not think that it’s too early to start planning for retirement. It is very important that you start early for your retirement. 

Stages or Phases of Retirement Planning pic

You can get a HOME LOAN to buy a property. You can get a PERSONAL LOAN to meet your short-term financial goals. You can get an EDUCATION LOAN to fund your higher education (or) to fund your Kid’s higher Education. But, you don’t get a loan to fund your RETIREMENT (let’s not talk about Reverse mortgage 🙂

Kindly visit the below link to know more about Retirement Planning goal (retirement goal calculator available).

Kid’s Education Goal Planning : As a parent, one of the most important financial goals to achieve is to plan for your children’s education expenses.  Considering the fact that the cost of education usually rises twice as fast as normal inflation, you should plan well in advance to meet the higher education expenses of your child.

Kindly visit below link to know more about Kid’s Education goal planning (calculator available).

Estate Planning : Estate Planning is the process of making a plan in advance and naming whom you want to receive the things you own after you die. Estate Planning is one of the most neglected aspects of personal financial planning. If the head of the family dies without leaving a Will (Intestate) or without mentioning the nominee names then it is an upheaval task for the legal heirs to access the investments/assets. We have lot of high profile examples for this, like Dhirubhai Ambani, Abraham Lincoln, Picasso, Agatha Christie, who died without writing a Will. 

Kindly go through below links to know more about WILLs & their importance.

Tax planning mistakes pic

Tax Planning : Death and Taxes are certain. Death happens only once. But, tax planning has to be done every year. Though tax planning is a very importance aspect of your Personal Financial Planning, it should not be the starting point of our investment plan. You should not invest in a financial product just to save on taxes. You should pick an investment option based on your financial goal(s) and if that investment option is a tax efficient one then well and good for you.

Go through below links on Tax planning aspect.

Financial Planning is a dynamic process. It is not a one time activity.  Achieving your financial goals doesn’t happen overnight, it takes careful planning, execution and continuous monitoring of the progress made.

Do you have a written financial plan? Do you prepare your financial plan by yourself or take help of an Investment advisor? Kindly share your views & comments. Thank you!

Continue reading other related articles on Personal Financial Planning;

(Image courtesy of Stuart Miles at (Post Published on : 27-May-2016)

  • Raj says:

    Hi Sree,

    I and my wife both are working professionals of age 28-27yrs respectively in bangalore earning together 18L p.a. No dependents as such.
    Goal is to create wealth in long term. Here is planning i have done..

    I have a short term goal (apprx.3yrs frm own a car), medium(apprx.5-7 yrs frm now..foreign trip) & long term (apprx.10-12yrs frm now..owning a house). And i have invested money in mutual funds with equity:debt ratio of 80:20 as per my aggressive risk taking profile. And also has emergency fund to bear monthly expenses upto 6 months.
    And now if i get a good deal to buy a house/flat which can be a good investment option and comes under my budget of around 30L-35L which i can go for 20% down payment and rest on home loan. So the query is
    1. should i go for it? and change my goal from long term to short term or i should stick to my previous plan as mentioned above?
    2. What exactly need to do in order to stick to our financial goals..or how often can we change it?? Because it is some times difficult to keep investing in the same pattern..

    Kindly suggest..

    • Sreekanth Reddy says:

      Dear Raj,
      You should you have your Retirement Goal planning also in place 🙂
      1 – Is this property for self-occupation or would you like to let it out? If for Self-occupation, how confident are you to be in the same city for say >10 years? May I know the plans of your Spouse w.r.t continuity of she being an earning member of your family?
      2- Goals can change. Priority of goal can change too. Suggest you to have a systematic investment plan and first invest in the suitable products on a periodic basis and then have a spending plan to meet your living expenses.
      How to create a SOLID investment plan?
      My MF portfolio for my Financial Goals.

      • Raj says:

        Sure, Thanks for advise. I am looking for retirement planning as well.
        1. This flat we are planning to keep on rent. I am not sure whether we will be in bangalore only for 10 or more years. That’s the reason to take this property and put on rent.
        My wife has plan to continue for at least another 5-7 yrs of job.

        Pls suggest if something better could be done.

        • Sreekanth Reddy says:

          Dear Raj,
          Considering demonetization and its impact on real estate industry, and considering your profile, if you get a good deal then you may buy a property for investment. But kindly do not over leverage when acquiring home loan. Do invest for your long-term goals as well.

  • Chandrasekharan says:

    Dear Srikanth,

    I am 65 years of age without any Pension benefits. I have invested my entire retirement corpus in the following debt Portfolios. I am covered by post superannuation group health insurance scheme for cashless treatment. I have no ailment issues. My wife is still working and we live in our house with my first married daughter. I have one more daughter to be married for which I require ₹10 Lakhs in 6 months to 1 year time. I require a monthly amount of ₹40000 for my expenses as I also contribute to the house expenses.
    My portfolio are as follows;
    FD in Banks: ₹49 lakhs (₹15 lakhs is maturing next month and balance in 2019)
    Senior citizen saving scheme: ₹ 5 Lakhs
    Axis Long term Equity Fund (Direct): SIP of ₹4000/-
    Birla Sun life tax plan (Direct) : SIP of ₹2000/-
    Considering the above kindly suggest the Re-allotment of my portfolio to meet my objectives and to be tax efficient also. I am willing to take moderate risks.


    • Dear Chandrasekharan Ji,
      You may re-invest around Rs 10 to Rs 12 Lakh of your FDs for short-term duration (3 to 6 months) – Towards 2nd daughter’s marriage expenses.
      May I know your investment objective(s) for investing in ELSS funds? Is it tax saving + wealth accumulation?
      Do you have any financial obligations besides marriage expenses?

      • chandrasekharan says:

        Dear Srinath,
        My investment in ELSS is for 80 C benefit + wealth creation.
        I have no financial obligation beside the marriage expense of 10 lakhs.
        Kindly suggest portfolios where I can invest to beat inflation and get my monthly expenses and reduce my tax out go.
        You have suggested investment in short term duration. Kindly elaborate.

        • Dear chandrasekharan Ji,
          As the marriage expenses can occur in the next 6 months or so, suggest you to invest in bank FDs only (Rs 10 to 12 Lakh).
          For periodic & regular income you may consider options like Sr. Citizen Savings Scheme & Post office MIS scheme. You may also have a look at Systematic Withdrawal option in MIP Mutual fund scheme – growth option.
          Read : Best MIP MFs.
          For long-term + tax saving : Consider ELSS funds like Franklin Tax shield or Axis LTE fund.
          Read: Best ELSS tax saving funds.

          • chandrasekharan says:

            Dear Sreenath,
            Thank you very much for your crisp and prompt suggestion and I value it very much.. Keep up the good work and wish you all the very best
            with warm regards

          • chandrasekharan says:

            Dear Sreenath,
            What is your views on investing in LIC Pension Plan, known as Jeevan Akshay VI single premium an immediate annuity plan. Can I invest some few lakhs to generate monthly income for life.
            What are its tax implications. Is it advice able in my situation.
            Tks and regards

          • Dear chandrasekharan Ji ..The annuity rates are pretty low in India. Also, the annuity income (pension income) is taxable. My suggestion would be not to consider it.

  • Susmitha says:

    Hi Sree,

    Thanks a bunch for the knowledge sharing!!!

    I am 25years old earning 44k per month.
    Expenses are like 20k pm for parents+ approx. 15k pm for my all expenses
    Please do suggest financial planning for remaining (6k to 10k pm) which would also cover Tax saving.

  • Rajkumar says:

    Hi Sreekanth,

    Thanks for very good info.

    I am planning to move to US in few months and i have PPF account and DMAT account in India.

    Can i still continue to invest in PPF, mutual funds and shares(in NSE or BSE) using that account ?

    My friends suggesting that its very useful to have NRE account , i want to know what are the uses of NRE account ?

    Could you please help me out.

  • Vivek Harshey says:

    very good work sir. Retirement planning is a very imp life decision. but how to generate regular stream of money with the retirement corpus is not covered yet. Also is there any way we can generate inflation protected income in retirement. Pl write an article on this.

    • Dear Vivek,
      Very good post idea. Thank you for the suggestion.
      Ofcourse there are ways to generate regular or passive income with a retirement corpus.
      To get inflation adjusted returns, the better option is to identify a set of investment avenues which can beat inflation (based on retired life duration, existing financial resources, family profile, health profile etc.,)

  • Krishna says:

    Dear Sreekanth.,

    Thanks for this summary work..I am regular to your site,, like reading a newspaper i daily visit u r blog.,

    Keep it up Sreekanth.,



  • Mukesh Kumar says:

    Hi Sree,

    I am of 30 year and currently a central government employee. I am having child of 3 months.I am under NPS with current value of Rs 4.30 lakhs. My monthly conribution incl. government towards NPS is Rs 7550/- which is expected to increase Rs 9000/- after pay commission.

    Monthly earning after all deduction:- Rs 42000/-
    Monthly expenditure is Rs 25000/-(including rented house @ Rs 8000/-)
    Invested in Axis Long term equity direct growth (SIP= 2000 from Dec-15)
    Retirement age 60 years
    Life expectancy 80 years.
    After retirement to live in self occupied house.

    Please advise:-

    1. How much I should invest each month to build retirement portfolio based on my current expenditure. Also suggest name of mutual fund along with investment break up.
    2. How much and which MF combination I should invest each month to build child education portfolio for Engineering after 17 year.

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