Skip to main content

How to attain financial freedom?

If we can be disciplined to do that — prioritise our needs over our wants — we would be on the way to achieving financial freedom as well as peace of mind. Here then is a primer on setting of your goals so that you can provide the same in a meaningful manner to your financial planner.

Preparing A Laundry List    

The first step in financial planning is communication. That's within the family first, so that a laundry list of all objectives is prepared. Your spouse surely needs to be involved, as much as your children, if they are at least teenagers. Let each one write all that they aspire for or dream about; reminding them not to forget their basic needs.
   Against each of the desires, write down the amount and the time (year) when you wish to fulfil them. If you cannot estimate the future value of the objective, write the current value — make sure that is uniformly done for all items on the list.

Separate The Needs And Wants    

Next, ask each one to bifurcate these desires into needs and wants. After that is done, let each rank the order of importance of these desires. I am sure your son or daughter will insist that he 'needs' the Ferrari, but you have to highlight that his higher education should get higher priority. This will also provide an opportunity for the family to identify a common list of priorities.

List Liabilities/ Commitments    

Your current commitments and liabilities need to be listed with the current amount outstanding, the frequency and amount of payment and when the commitment comes to an end. If you have listed a personal loan as one of the liabilities, make sure that the interest payments, if they are to be met separately, are also listed.
   Further, any personal borrowings from the family also need to be listed, though there may be flexibility in repayment of both principal and interest.

Track Of Expenses?    

Even the most meticulous individual seems to falter when it comes to determining expenses incurred on a regular basis. It is also extremely important to classify these expenses, so that it is possible to determine the scope available for reducing expenses, should a need arise. For example, school fees will be fixed, but the budget for eating out can be adjusted.

INFLATION AND FINANCIAL GOALS?    

We are aware that the official rate of inflation now published by the government on a monthly basis may not reflect the increase of the cost of goods and services that are consumed by me. We also realise that some items like education costs rise at a faster pace than others, and hence, applying a uniform inflation rate may not reflect an accurate future value of the goal.
   So now we have three key components for a financial plan in place: your financial objectives, your liabilities and your expenses. Next week, we shall focus on how your assets and the income fit into your financial plan. Till then, don't forget to do the homework stated above.

 

Popular posts from this blog

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...

Equity Savings Fund

Invest Equity Savings Fund Online   The best part about these funds is that they are subject to equity fund taxation and at the same time are structured like MIP like funds . This new category, equity savings funds , offer a little of everything. They allocate money to equities & equity related instruments, and fixed income. They aim to generate returns by diversification. Such funds invest in fixed income and arbitrage to protect the investors from short term volatility and equity for capital gains. The best part of these funds is that they are subject to equity fund taxation and at the same time are structured like MIP funds.   MIP funds however are subject to debt fund taxation. Investors Equity savings funds are suitable for the following: First time investors who seek partial exposure to equity with less volatility and greater stability Investors seeking moderate capital appreciation with relatively lower risk Those wh...

WEALTH TAX

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 WEALTH TAX   WHAT CONSTITUTES WEALTH? For wealth tax purposes, "wealth" means property , urban land, car, jewellery , yacht, boat, aircraft and cash in hand in excess of Rs 50,000. CAUTION POINT | Do not think you will have an easy escape from wealth tax by transferring your `wealth' without consideration to your spouse or minor child. Such assets will also be considered as your wealth. HOW TO DETERMINE YOUR TAXABLE WEALTH Add the taxable value of the above assets (computed as per the detailed rules for valuation) owned by you as on March 31 (for FY 2014-15, it will be March 31, 2015). In case you sold your car during the year, it will not be taxable wealth. Deduct loans if any obtained by you to acquire any of the taxable assets from the value of gross tax out for at least 300 days in a...

How to Pick Top Performing Mutual Fund Schemes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to Pick Performing Schemes  Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts   The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they bo...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now