Personal Financial Planning

LOVELY PROFESSIONALUNIVERSITY

ASSIGNMENT-1

PERSONAL FINANCIAL PLANNING

Submitted to:
MR. NARESH KEDIA

Submitted by:
Name : Sheikh Nadeem (11112722) Aaishan Mushtaq(11112699) Section: QE022

Personal Financial Planning

Introduction
Financial planning is often thought of as a way to manage debt, but a good financial plan really is a way to make certain that you have financial security throughout your life. Many small business owners consider their business as their investment in their future, but that is a huge risk to take. The essential components of a good financial plan are investing, retirement planning, insurance, borrowing and using credit, tax planning, having a will, and ensuring the right people receive your assets. Financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child's education or planning for retirement.

Income and expenditure account: This is the account which is prepared for record the inflows
and outflows of the income and expenditure of the individual, firm, company, and any organization. I am taking this tool of accounting for managing or recording the inflows and outflows of my family and myself also. We have our family business running by my father and brother.

Income and Expenditure account for the year

Income
Father Mother

Amount

Expenditure

Amount
182000 12000 200000 36000 17000 95000 90000 4500 2400 24000 12000 12000 4800 1500 1000 110000 95800 900000

600000 Interest Paid 300000 Electricity Bill Kitchen(Food) Vehicles(Servicing) Insurance Premium travelling Expenses Clothes Gas Water Telephone expenses medical expenses insurance auto cable T.V. House tax Road tax fees Education Surplus(transfer to balance sheet) 900000

Personal Financial Planning

Balance Sheet for the year

Liabilities Capital Reserves and surplus Loan(education) Creditors Bank overdraft Auto Loan Outstanding expenses Bank credit cards

Amount Assets 1000000 House 95800 Vehicles 300000 250000 50000 100000 Laptop

Amount 4000000

Discover Pulsar ALTO

30000 40000 275000 35000 25000 100000 19000 50000 80000 60000 70000 200000 4985000

60000 Desktop 150000 Machinery Mobile Phones Cash in Hand Cash at Bank SBI HDFC PNB J&K Bank 2000000

List of Financial services organizations which are used by my Family

State Bank of India(SBI) Punjab National Bank (PNB) Jammu and Kashmir bank(J&K Bank) HDFC Life insurance Corporation Bajaj Alliance Post office

Personal Financial Planning Co-operative Societies EMERGENCY FUNDS Nobody can predict future everybody should be ready for uncertain things. To deal with this uncertainty emergency funds are important. My family makes an ample investment in banks saving account because we can withdraw money from the bank at any time. INSURANCE COVER Insurance is very important in todays world be it from health to house. My family has a health insurance scheme of lic, medical insurance from Bajaj alliance, car insurance from Bajaj alliance, and house insurance from lic. RETIREMENT INCOME The age of my father is 50+ and my mother 45+. They have opted for retirement scheme from lic, also they have invested in fixed deposits.

Personal financial goals

The most important and tough goal in an individuals life is setting up long term goals to help him/her financially. It can be anything from savings to house building to childrens education or marriage to retirement plan. These are the basic dreams when a person enters into a job. When a person achieves these goals he/she feels successful and also sometimes elated in the society. If setting up a goal is a big task then the toughest task is to achieve them and plan how to achieve them. There are some definite triggers that a person can use to achieve his/her goals. An urge to do something, certain important events in ones life etc are the biggest clue to accomplish it. Following are personal financial goals:-

Short term goals:

Save money in holidays. Maintain reserves for shopping in next month. Save money for day to day expenses.

Personal Financial Planning

Long term goals:

Savings:

It includes cutting down discretionary expenses and being economical. A corpus of substantial amount which can then be used to buy plans for regular monthly income is an effective use of the savings. My parents want to save money for the marriage of my sister and also for the higher studies of my younger brother. Education: The most costly thing now-a-days is childrens education. We definitely want our children to get the best education by sending them to the best universities. Some of the banks are giving loans at a very reasonable interest rate. We can afford to get these loans and provide them with best universities education without losing our minimal expenses. Most of the banks are giving options for investment into childs future plans from the moment a child is born. These investments cost less and they take a yearly amount and these investments also go for a short period giving us long term returns. We need to take our valuable time to study these company portfolios and details of the investments so that our money is invested in the right plans. My parents are saving money for the study of my sister and brother. House: Building a house is the dream of every person and also according to his/her tastes and convenience. Most of the banks are giving loans with a reasonable interest rate for the construction of the house. But for obtaining this we need to study carefully to what amount we can take loan so that we are not financially down and we meet our familys and also our daily or monthly expenses. Any unnecessary expenditure is to be cut down like dining out every weekend or unnecessary shopping. My parents are planning to build a new big house. For that purpose they are making the savings. Medical Insurance: Of all the long term investments the most important one is medical investment. What if we have everything but health? Different countries have different format to support medical costs. You need to evaluate what work best for you in term of emergencies or during the fag years of life and then opt for it. My parents have opted the medical insurance from lic for the uncertain things.

Personal Financial Planning

Others:
Purchase a brand new car. Go on the yfamily tours. Maintain the funds for the immediate expenses. Make reserves and surplus to meet the future uncertainty. Increase the standard of living in the society. Invest the money in the future plans.

Process of Personal financial planning

The personal financial planning process is as follows: Setting goals with the client This step is meant to identify where the client wants to go in terms of his finances and life. Gathering relevant information on the client This would include the qualitative and quantitative aspects of the client's financial and relevant non-financial situation. Analyzing the information the information gathered is analyzed so that the client's situation is properly understood. This includes determining whether there are sufficient resources to reach the client's goals and what those resources are. Constructing a financial plan Based on the understanding of what the client wants in the future and his current financial status, a roadmap to the client goals is drawn to facilitate the achievements of those goals. Implementing the strategies in the plan Guided by the financial plan, the strategies outlined in the plan are implemented using the resources allocated for the purpose. Monitoring implementation and reviewing the plan The implementation process is closely monitored to ensure it stays in alignment to the client's goals. Periodic reviews are undertaken to check for misalignment and changes in the client's situation. If there is any significant change to the client's situation, the strategies and goals in the financial plan are revised accordingly.