- Webpages
- Documents
- HDFC Life ClassicAssure PlusInvestment
- HDFC Life ClassicAssure PlusInvestment
- HDFC Life ClassicAssure PlusInvestment
For NRI Customers
(To Buy a Policy)
-
![Contact Image]()
Call (All Days, Local charges apply)
-
![Contact Image]()
Email ID
-
![Contact Image]()
Whatsapp
(If you're our existing customer)
-
![Contact Image]()
Call (Mon-Sat, 10am-9pm IST, Local Charges Apply)
-
![Contact Image]()
Email ID
For Online Policy Purchase
(New and Ongoing Applications)
-
![Contact Image]()
Call (All Days & Toll free)
-
![Contact Image]()
Schedule a call
-
![Contact Image]()
Whatsapp
-
![Contact Image]()
Give missed call to buy a policy
-
![Contact Image]()
Email
Branch Locator
-
![Contact Image]()
Locate a branch
For Existing Customers
(Issued Policy)
-
![Contact Image]()
Whatsapp
-
![Contact Image]()
Call (Mon to Sat, from 10 am to 7 pm, Call charges apply)
-
![Contact Image]()
Email
Fund Performance Check
-
![Contact Image]()
Call (Missed Call)
:1800-266-9777
What is Personal Finance?
Table of Content
Financial management, i.e., balancing your expenses with your income and creating a resource to invest for the future, is the personal finance meaning. Knowing what are financial goals becomes critical in this process, as they represent the specific targets that guide your financial strategy. It begins with setting financial goals, tracking expenses and prioritising needs over wants, creating emergency funds for unforeseen expenses, investing for the future, and reviewing and adjusting your investment to align with changing goals and market trends. In brief, personal finance is a strategic way to secure your financial future.
Personal Finance – Definition
Prudent management of your income, savings, and investments to fulfil the financial objectives set for different life stages defines what is personal finance. Creating a budget, investing the savings to align with your goals and risk tolerance, retirement planning, etc., are all an integral part of personal finance planning. The two components of personal finance are savings out of your income and investing it in assets for high returns to build wealth over time.
Understanding the Importance of Personal Finance
Just knowing what is personal finance does not in any way lead to financial freedom. You should also understand the importance of personal finance and integrate it into your life. It is beyond monitoring your expenses and striking out the unnecessary ones to create resources for saving. It is a pathway to financial security. Personal financial planning helps you manage your finances and make smart investment choices to achieve stability and financial independence. It may involve different types of financial planning based on your life stage and financial goals.
Key Elements of Personal Finance
Once the personal finance meaning is understood you should also know the elements of personal finance for efficient planning. The given below elements are essential to align your financial strategies with your overall objective of financial planning, whether it's retirement security, achieving specific goals, or simply improving your financial well-being.
Income
Expenses
Investments
Financial Safety
Income is what sets your personal finance journey rolling. The moment you have a steady income, personal finance planning becomes essential. Your income source can be anything that generates earnings, such as a business, freelancing, financial investment, or financial services like insurance, in addition to a salary.
The next most important aspect of personal finance after income is expenses. Income and expenses go hand in hand. Whenever you seek financial advice from professionals, they never suggest allocating all the funds to savings. Their advice will be to spend just enough to not even reach your financial goals.
Investment is a vital element of smart personal finance. Parking your funds in a high-yield savings plan, purchasing an insurance plan, and allocating funds to equity, mutual funds, etc., are all investments. As part of your overall financial planning and wealth management strategy, if wealth creation is your goal, you should invest in assets that align with your goals, risk tolerance, and affordability. Apart from growth, asset protection is vital to safeguard your investments against market risks. For this, you need to have an in-depth knowledge of market trends and require thorough research before putting your savings into any asset.
Money that does not provide financial safety is of no use. Life is uncertain, and eventualities cannot be predicted. Being prepared to face any eventuality is the crux of personal finance. Your investment plan should necessarily include insurance, which provides death benefits for your family’s financial security and maturity benefits to help meet your short term financial goal.
Tips for Managing Your Personal Finances
Financial literacy navigates personal finance in the right direction. Implementing steps in financial planning is crucial, as these provide a structured approach to managing one's financial journey. Not all of us can make smart decisions about savings and investment. Here are some tips for personal finance that boost your financial discipline.
Create a Budget
Save First, Spend Later
Control Your Spending
Make Sure You Have Enough Insurance
Setting financial goals initiates personal finance exercise. The next move is to create resources to invest and earn returns to fulfil the goals. Financial strategies like creating a budget will help you manage your income and save for long-term financial goals.
A meticulously drawn budget will prevent stretching beyond your income. Instead, it helps you track your expenses and eliminate the unnecessary ones to save extra for fulfilling all the listed goals.
The rule for a perfect budget is to allocate 40% of the net earnings for mandatory expenses like grocery, utility bills, and school fees, etc., 30% for entertainment and shopping, and 30% to save for the future, including building retirement funds and creating a diverse investment portfolio.
Save first and spend later is the mantra to create an emergency fund, especially if you have just begun your career. The kitty should have enough to manage 3 to 6 months of living expenses and even up to 12 months if you can afford to save more. The fund should be accessible in case of need, and so it has to be parked in high-yield accounts like fixed deposits, short-term mutual funds, etc.
The rule of personal finance is not to be extravagant. Delay the not-so-needed expenses and keep a check on your spending. Overrunning your budget will affect your financial health as you may end up borrowing funds to meet your immediate goals. Make a list of all the mandatory expenses that arise in a year and allocate funds to meet them in advance.
Insurance is a lifeline during adverse situations. With adequate life insurance, your family's financial wellbeing can be protected, ensuring they remain financially independent even if you're not around. The overall requirements of your family should be the yardstick to determine the sum assured. Otherwise, with insufficient funds, they may land in a financial crisis. Besides life insurance, you should also have sufficient health insurance to provide for medical expenses.
It is recommended that you purchase insurance with a life cover equivalent to 10 times your annual salary and health insurance with coverage equal to your annual salary. Additionally, investing in a retirement plan like ULIP will ensure a comfortable life during your golden years. Since individuals of all age groups need insurance products, investing in them early in life makes them more affordable.
How to Minimize Taxes with Personal Finance
Tax planning typically focuses on investing in tax-efficient investment products. However, a comprehensive key characteristics of financial planning is recognizing the tax benefits of various financial decisions. However, there are tax-efficient loan products that can also be considered to minimise tax liability. If you strive hard and maintain a good credit score you can avail of a home loan at a nominal interest to fulfil one of your long-term goals, i.e., owning a dream home. Given below are some tips to minimise tax.
It is essential to note that the total deduction available under section 80C considering all the above investments allowed under this section should not exceed Rs.1,50,000 per year. Individuals and HUFs are both eligible for Section 80C deductions.
Summary
Personal finance is challenging but not an impossible task. Anyone who understands the importance of personal finance will start the journey at the earliest. Keeping it as simple as possible is imperative for better results. But fund management cannot be done haphazardly. Strategic financial planning provides a structured approach. This involves setting clear financial goals, creating a budget, building an emergency fund, and regularly reviewing and adjusting your investment portfolio. The advantages of financial planning are numerous, as it leads to better financial outcomes and helps in wealth creation. The sooner, the better. The rule is to head towards wealth creation, so start investment planning immediately after you get a job.
FAQs on Personal Finance
Q. What is personal financing planning?
Personal financing planning is managing your income efficiently to create resources to invest for the future. It involves assessing your current financial health, identifying your goals, and creating an investment plan to meet them.
Q. What are the steps in personal finance planning?
The steps in personal finance planning are setting financial goals, gathering financial information, analysing the current financial situation, creating emergency funds, investing for the future, and monitoring and adjusting the investment portfolio.
Q. What are the basic components of personal finance?
The importance of financial planning lies in effectively managing the key components of personal finance: income, expenses, savings, investment, and financial security.
Q. What is the 50-30-20 rule?
The 50 30 20 rule is 50% of your income should go towards needs like grocery, utility bills, health care, and insurance, 30% should go towards wants like entertainment and shopping, and 20% should go towards saving and investment like creating an emergency fund, planning for retirement, etc.
Q. How do you save money from your salary?
Creating a budget gives a head start to saving money from your salary. Track your expenses and eliminate the ones that are not necessary. Save with a purpose. If need be, automate the savings. Invest any extra income, like bonuses, incentives, etc., in various assets to align with your risk tolerance and goals.
Related Articles
- Importance of Financial Planning
- Financial Planning and Wealth Management
- Financial Freedom for Women Entrepreneurs
References:
1. https://cleartax.in/s/personal-finance
2. https://www.forbes.com/sites/truetamplin/2024/11/04/5-tips-for-managing-your-personal-finance-in-the-next-four-years/
Not sure which insurance to buy?
Talk to an
Advisor right away
Advisor right away
We help you to choose best insurance plan based on your needs
Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
Written By:
Vishal Subharwal
Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.
Reviewed By:
Here's all you should know about life insurance.
We help you to make informed insurance decisions for a lifetime.
HDFC Life
Reviewed by Life Insurance Experts
HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER
We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.
Popular Searches
- term insurance plan
- savings plan
- ulip plan
- retirement plans
- health plans
- child insurance plans
- group insurance plans
- personal accident insurance
- saral jeevan bima yojana
- income tax calculator
- pension calculator
- bmi calculator
- compound interest calculator
- income tax
- tax saving investement options
- best investment plans
- benefits of term insurance calculator
- what is term insurance
- why to invest in life insurance
- Ulip Vs Mutual Fund
- tax planning for salaried employees
- how to choose best child insurance plan
- tips for buying retirement plan
- 1 crore term insurance
- HRA Calculator
- term insurance plan
- life insurance
- life insurance policy
Note: Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions. Tax Laws are subject to change from time to time. Customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.
This material has been prepared for information purposes only, should not be relied on for any financial advice. You should consult your own financial consultant for any financial queries.
1. Provided all due premiums have been paid and the policy is in force.
18. Save 46,800 on taxes if the insurance premium amount is Rs.1.5 lakh per annum and you are a Regular Individual, Fall under 30% income tax slab having taxable income less than Rs. 50 lakh and Opt for Old tax regime.
ARN - ED/12/24/19051
