It’s rightly said – “earthier start financial planning early or don’t do it”, but it’s is usually overlooked in the early stage of the carrier and by the time it’s significance is realized it becomes late to begin for some crucial financial goals like- Pension planning & Health planning. Therefore graduation is the time for the college students to prepare their financial plan based upon their life goals. Financial planning helps the individual to determine their short and long-term financial goals to create a balanced plan to meet their specific goals in the systematic way.
Financial Planning-
Financial planning is the process of developing a personal roadmap for financial wellbeing. The output of the financial planning process is a personal financial plan that tells you how to use your money to achieve your goals, keeping in mind inflation, real returns, and taxes. Process of systematically planning your finances towards achieving your short-term and long-term life goals
Benefits-
Helps monitor cash flows and reduces unnecessary expenditure. It enables maintenance of an optimum balance between income and expenses and helps to boost savings and create wealth. It helps in reducing tax liability and maximizes returns from investments by creating wealth and ensuring better wealth management to achieve life goals. Financial Planning ensures financially secured retirement life, Reviews insurance needs and therefore also ensures that dependents are financially secure in the unfortunate event of death or disability
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Financial Planning Process
1. Identify your current financial situation
2. Identify your goals
3. Identify financial gaps
4. Prepare your personal financial plan
5. Implement your financial plan
6. Periodically review your plan
Different Investment Avenues- It’s the time when there are different investment avenues available based on your goal and risk taking appetite, and this planning must start from the college days when students are about to enter into the corporate life as young professionals, so that the moment students becomes professionals they should be able to plan their investments under the following investment avenues based upon their goals & risk taking appetite.
High Risk Instruments
Medium Risk
Low Risk
Growth Stocks
Mutual Funds
Government Bonds
Commodities
Insurance products(ULIPS)
Post Office Schemes
Growth Mutual Funds
Commodities
Public Provident Funds
Small Cap Funds and stocks
Gold
Bank Fixed Deposits
Real Estate
Gold
Balanced Stocks
Real Estate
.
Financial Planning for the College students– Following are the major categories of Goals that must be clearly defined right from the college/ University days.
Short Term Financial Goals- Operational goals & goals related to day to day expenses (Expenses to be incurred during a financial year)
Long Term Financial Goals- Life Security (Term Insurance), Health Security, Pension Planning, Child-Education & Marriage planning and last but not the least is wealth planning.
By considering the above financial investment avenues if Students are well prepared about their life goals in the very beginning of their carrier, then only they will be able to plan their investments in synchronization with their shot term and long term goals to ensure financial well being.
Upendra Nath Shukla
Assistant Professor
Amity Business School
Amity University
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