Congratulations! You have heeded a very important financial advice, and created for yourself an emergency fund. Having a buffer of three to six months of expenses in liquid assets is a significant measure. It is in fact an integral part of financial planning.

But what comes next?

You need to have a plan for the amount that you were putting away for the fund till now. Appraisal or bonus money should be allocated wisely. Without proper planning, it is easy to turn into a lifestyle creep. Now that you have created a nest egg, here is what to plan for next –

Create Wealth

The best way to create wealth, especially for salaried individuals is to start investing. Instead of depositing all your savings in banks, work towards investing some of that amount. To start investing, you can opt for a Systematic Investment Plan (SIP). You can always get a financial assessment done to decide the best plans for yourself. Take the help of a financial advisor, and don’t be afraid to ask questions!

Plan for retirement 

If you haven’t made retirement planning a priority yet, do it now. It is never too early to start saving for retirement. You can opt from products such as National Pension Scheme (NPS), Employee Provident Fund (EPS) among others.

Improve credit score

A good credit score makes it easier to avail loans from financial institutions. Make sure to pay off any consumer debt, such as credit card loans if you receive a windfall. It is important to never miss out on an EMI (Equated Monthly Installment)

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All of us spend more than half of our lives earning but in order to make your hard-earned money to work more effectively for you, one has to do financial planning. It starts with a review of your overall profile and planning your financial goals. These goals can include buying a house, saving a fixed amount of money for your child’s education or planning retirement.

The six steps which can help you in achieving your financial goals are namely, listing the financial requirements of future, setting life goals, examining your current financial status and planning a strategy to meet your financial goals.

Decide your financial goals

By viewing each financial decision as a part of your whole financial goal, you can consider its short-term and long-term effects on your life goals. As a result of this, you can also adapt more easily to sudden changes in life and feel more secure that your financial goals are on track.

Get a professional financial advice
The financial planners are not governed by the government. Instead, it regulates planners by the services they provide. For instance, a financial planner that provides insurance transactions is regulated in the form of an insurance agent. Many financial advisers like accountants and investment advisors can also offer the financial services. So, before getting a financial planning service, check if the advisor follows the six-step process mentioned earlier.

Commonly made mistakes in financial planning

The following are some of the common mistakes made by consumers in their approach towards Financial Planning.

• Not setting measurable goals.
• Confusing financial planning with investing.
• Not evaluating the financial plans periodically.
• Thinking that the financial plans are only for wealthy people.
• Expecting unrealistic returns on investment.

Hence, financial planning when done with an authorized financial planner protects you and your family from the financial uncertainties during the times of crisis. It can also help you to secure your present if you assess your current financial situation and plan your future accordingly.

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