A financial plan usually is considered a conscious effort to put your money life in line by assuring that you invest correctly. But, your money life is a lot more than only your investments. To get to a suitable investment, you must concentrate on some other aspects of your financial life. 

How financially secure you already are will determine the way you address this. A financial plan for someone just beginning with planning their money matters can be considerably distinctive, say, from someone who has already accumulated wealth. Nonetheless, both require to focus on overall planning rather than just investments.

Avoid Debt

While you could make financial adjustments for your children’s college education, review your financial position after that. Financing post-graduate education could influence your retirement savings. If it is not affordable, it is more sensible to tell your children and preferably take a student loan. Assure it is repaid by your adult children from their incomes, generally within five years.

Finally, it’s all about balancing things out. You should help in emergencies. But, make sure that, while helping them, you are not making them financially reliant on you. After all, the most valuable legacy you can leave for your kids is learning to be economically self-sufficient.

If you are beginning…

There is much more to focus on when you are just beginning. Initially, you must have proper health insurance cover to secure those significant, unexpected medical risks that can sneak up on you. Also, if you have dependents, think of securing their interests by taking a life insurance plan for a policy amount that meets the loss of financial security in case of your unfortunate death. These are two odds that can now be taken care of even if you don’t have sufficient savings or long term investments. 

Investing is a significant step in your financial plan; concentrate on it only after the essential safety nets have been appropriately taken care of. 

Next, set up a reserve that can be funded to watch other crises like job loss or disability. 

Your investment plan will come through if the above is not done initially; that’s why a complete financial plan is essential.

For instance, say you don’t have medical insurance and, suddenly, you face a car accident, all of your family members, including you, are hospitalised for a significant period. No one could have predicted this occurrence, nor can you repress the outcome; hospitalisation charges without an insurance plan will affect your long term investments, thereby destroying the plan you had. 

Therefore, see that you aren’t in the trap of bank loans with huge EMIs to pay. 

If you have sufficient wealth…

Let’s suppose you not only have a pile of investments you are already sitting on but also you have all the safety nets in place. Can you now concentrate on an independent investment strategy? You could, but the risk is, by focusing on that, you will end up creating investment choices depending solely on the anticipated return. Still, the hope of high return, particularly in a short period, also occurs with high risk. 

The subsequent PMS or AIF idea, the latest international fund, the venture fund that everybody else is funding in, doesn’t have to be your option too. You may need to diversify your plans, but it is also essential to have the selection simple so that risk is not increased and, more importantly, risk suits your own life’s situations. It doesn’t mean you should put your funds at risk just because you have a healthy amount of savings in place. 

As your capital grows, your lifestyle will improve too. With accounting for that in your insurance policies and emergency fund, you have to recognise that a potentially increasing family size will also be provided with your current investments. 

Life circumstances are such that you cannot consider investments in isolation. Always have at least one eye on all the other perspectives of your economic life before leaping into investments.