- 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)
Steps in Financial Planning
The perception of financial planning differs among individuals. Some presume that financial planning is just about budgeting expenditures and saving money for emergencies. Little do they know that a comprehensive financial plan is pivotal for effective wealth creation. ...Read More
Investment plan for 10 years5-Lakh Investment PlanInvestments in your 20s25-Lakh Investment Plan
:1800-266-9777
Understanding the 7 Steps in Financial Planning
Table of Content
What is the Financial Planning Process?
The financial planning process is all about managing your finances effectively. It helps you take control of your income by identifying the steps in financial planning necessary to achieve the financial objectives determined.
Reviewing the current financial situation, spending traits, investments, and goals are all a part of prudent financial planning. You can seek advice from a financial advisor if necessary, to guide you through the process and help you organise your finances. Investment strategy development is one area that can be less overwhelming and seamless with the guidance of a financial advisor. Start organising your finances for effective growth with the help of a certified financial advisor.
The 7 Steps in the Financial Planning Process
Managing finances can be a stressful task without proper planning. Effective management of your money involves financial planning stages that can be divided into various steps. Given below is a step by step financial planning pattern that helps you achieve your short and long-term financial goals.
Step 1: Set Your Financial Goals
Step 2: Gather Financial Information
Step 3: Assess Your Current Financial Situation
Step 4: Create a Budget
Step 5: Build an Emergency Fund
Step 6: Invest for the Future
Step 7: Review and Adjust Regular
Defining goals like retirement savings planning, creating an emergency fund, planning a foreign trip, children’s education, etc., are all part of the financial goal setting process. The goals may involve short term investment or long-term financial planning. However, setting a timeline is important for either of them. The objectives should, however, be realistic so that you can achieve them with some effort and stay motivated.
Gathering financial information is one of the most important steps of financial planning. This will give an insight into your financial standing. Collect applicable documents like bank statements, insurance policies, share certificates, tax returns, etc. You can then classify your expenses for a complete idea about your income and expenses to draw a budget.
This is one of the steps in financial planning that gives a complete picture of your current commitments. Arranging the financial documents in sequence gives a vivid idea about your income, expenses, assets, debts, and other financial obligations. Evaluate your risk tolerance and tweak your investment portfolio. Risk management in financial planning is pivotal to minimising losses.
Creating a budget is an integral part of the steps in financial planning. Your budget should cover both a short-term plan, a long-term investment plan or both. Debt management plan is an important aspect of drawing a budget that helps reduce your financial obligations. The budget should be tailored to your current financial situation, goals, and commitments.
Building an emergency fund is one of the key wealth creation steps. Equipped with the knowledge of what is financial planning and how to develop the plan, you should focus on achieving the goals including building an emergency fund. You can create the fund by parking a part of the surplus income in assets that provide guaranteed returns with easy liquidity like fixed deposits, high-yield savings accounts, money market accounts, etc.
Financial assessment techniques entail evaluation of current financial health, risk tolerance and goals. A crucial component of investing for the future is securing adequate life insurance coverage, which serves as both a protection mechanism and a potential investment vehicle depending on the chosen policy type. With your insurance foundation in place and investment equation ready, investing for the future becomes simple. Further, to understand how the investments help wealth creation, you can calculate the return on your investment using a compound interest calculator.
The step by step planning will lead you in the right direction only if you diligently review and adjust your financial planning. Reviewing and adjusting the financial budgeting steps periodically is imperative to check if you are heading towards your goals effectively with the existing financial planning framework.
Conclusion
Financial planning is beyond the general concept of managing your expenses and saving money. Financial stability and effective wealth creation to accomplish financial goals can be achieved only by following the steps of financial planning. The financial planning process steps involve defining realistic financial goals, understanding your current financial health, drawing a budget, building emergency funds, investing for the future, and reviewing the financial plan periodically.
The step-by-step financial planning approach helps evaluate your resources for investment, manage risks, and work towards achieving your goals while keeping the financial future intact. Approach gives clarity, maximises resources, manages risks, and enables you to work towards your goals while keeping your financial future intact.
FAQs about Steps in Financial Planning
Q. Why is setting financial goals the first step in planning?
Setting financial goals is one of the first steps in financial planning as it gives an idea of your specific needs. It sets a purpose for your financial journey and motivates you. It improves focus in decision-making, helps effective resource allocation, and inspires you to stick to your plans.
Q. How much should I save in my emergency fund?
Emergency funds make resources available for unforeseen expenses and loss of income due to events like loss of job, accidental disability etc. According to the cash flow management steps, the emergency funds you build should suffice 3 to 6 months of your living expenses.
Q. How can I start investing for the future?
Before starting to invest for the future assess your current financial health and the funds available for investment. Define your goals and choose investment plans to align with your goals, risk tolerance, and timeline. Review your portfolio and adjust depending on market trends to minimise losses.
Q. How often should I review my financial plan?
Most financial advisors suggest reviewing financial plans once a year. This gives ample time to examine your spending pattern and also to understand if the goals set are relevant to the present life stage.
Q. What are the steps in the financial planning process?
The steps in financial planning include setting goals, gaining information about your finances and assessing your current financial health. It then moves on to creating a budget, building an emergency fund and ensuring you are investing for the future. Lastly it includes reviewing and adjusting your financial plan periodically. Tax-efficient planning plays an important role in financial planning as it reduces tax liabilities, optimises resources, and ensures long-term wealth growth.
Related Article
- Financial Planning: Importance of Financial Planning | HDFC Life
- Importance of Savings & Investments
- Financial Planning and Wealth Management | HDFC Life
- Financial Freedom for Women Entrepreneurs | HDFC Life
- Financial Planning: 5 Best Things to Teach Your Child About Savings
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:
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.
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 - MC/11/24/18290
