Step-by-Step Guide for Financial Planning in 2024

Jul 22nd 2024
Financial Planning in 2024

A financial plan is a tool that helps you manage your money in the right manner. It identifies your income sources, such as your salary, and tracks your expenses, including rent, food, and entertainment. Beyond this, it is set to achieve goals, like getting a new bike, planning for a fun vacation, or building a comfortable retirement fund.

You can think of it as a map of your finances. It helps you avoid debt and even grow your money through investing. In this article, a complete step-by-step guide is shared with you, that you can use to create your financial plan. 

What is Financial Planning?

This is a document that has details of a person related to his/her current financial circumstances. The plan can be made for short- and long-term monetary goals and for that, you must follow some strategies. The plan can help you establish and prioritize fundamental financial needs, such as managing risks, income and spending, and reducing debt.

Why Financial Planning is Required?

Here are some of the reasons behind the importance of financial planning for every individual:

1. Manage Cash Flow:

A financial plan includes an outline of your income and expenses. This allows you to gain a clear understanding of where your money goes each month. The tracking of your money will stop you from spending against the budget. Or, you can easily identify the areas where you are overspending. In response to that, you can make adjustments accordingly.

2. Better Investment Option:

A good financial plan includes both long-term and short-term goals. So, this clarity helps you to understand your investment horizons and risk tolerance. For example: if you need money for a short-term goal, then investing in a highly volatile asset will be risky. Like equity market is volatile and requires you to park your money in the asset for the long term to gain profits. It is better to invest in mutual funds, fixed deposits, or Sovereign Gold Bond Scheme.

3. Early Debt Pay-Off:

In the plan, you include a detailed record of your debts, such as balance, interest rates, installment, and time to complete. So, this gives you a clear picture of your overall debt burden and according to this, you can plan your other expenses. In case of a shortage of funds, avoid unnecessary expenses or tasks that can be held for some time.

4. Achieve Long-term Goals:

The right financial plan will show you a clear roadmap about where you want to be after twenty or thirty years. It will give you insights into the money you require to fulfill your dream project. For example: building a home, jewellery, study abroad, startup, and much more. 

It is better to start planning your finances early. As it will help you save more money and reach your goals without any delay. However, to get the advantage of compound interest, early investment is a better option.

5. Calculate the Right Insurance Cover:

If you haven’t bought health insurance and life insurance yet, then planning your finances will help you choose the right cover. Or, in case, you already buy insurance, then you can increase or decrease the premium as per your family requirement in the tough times. 

The planning will help you understand your annual expenditure and according the that, you should choose the cover. However, there is no one-size premium covering that to all. Ideally, the individuals take cover 8 times higher than their annual salary.

What Financial Planning Includes?

Preparing a financial plan can seem a tough process, but it is a crucial step in your better financial future. Below is a step-by-step guide to get you started:

1. Collect Information:

The very first step in creating your financial plan is to gather information on your income, expenses, debt, and assets. In the income, list down all your income sources, including salary, investments, side hustles, affiliates, and others.

In expenses, track your monthly spending and analyze the areas where you are spending unnecessarily.

You can separate the data into categories such as rent, groceries, entertainment, etc. Now, there are many tools in the market, that share the chart of your spending. You can check the InvestKraft tool for analyses of your spending, and investment.

2. Set Goals:

Set the plan into three types of goals such as short-term, mid-term, and long-term. The examples of these goals are as follows:

  • Short-term (1-3 years): Going for a vacation, buying a new car, or paying off a small debt.
  • Mid-term (3-5 years): Purchase a house or plan for higher studies abroad.
  • Long-term (5+ years): Focusing on retirement, building wealth, or creating a legacy.

3. Analyse Your Current Situation:

To analyze your current situation, you have to calculate your net worth, cash flow analyses, and risk tolerance. Understand how comfortable you are with the potential investment risk. However, analyzing your situation, and goals will save you from extra loss.

4. Create a Strategy:

For financial planning having a strategy is a must, you can choose from budgeting, debt management, and emergency funds. Below is a detail of each point:

  • Budgeting: Make a realistic budget, you set unrealistic goals for you. Otherwise, it will create unnecessary pressure on you to complete those goals. Allocates your income towards savings, debt repayment, essential expenses, and discretionary spending.
  • Debt Management: Develop a plan to pay off your debts. If you have multiple debts then you should prioritise paying the high-interest debts first.
  • Emergency Fund: It is an important factor in a secure financial plan. As it will save you in the future from any uncertain event, similar to the insurance. So, in the emergency fund, you must include the amount of your living expenses for up to 3-6 months to cover unexpected events.

5. Document Your Plan:

To create a plan, you can choose both online and offline methods. In the offline method, you can use any diary or there are printed planners, you can buy. For online, you can use Google Sheets or budgeting websites or apps. In the plan, write down all your goals, strategies, and action steps. Review your plan regularly and adjust it as per your expenses and income.

Types of Financial Planning

Individual financial planning in India is categorized into multiple types. Each type of plan is prepared for specific goals and life stages. Here's a breakdown of some common types:

By Life Stage

  • Young Adults focus on early career decisions like budgeting, saving for their first home/marriage, and starting retirement planning.
  • Families: plan for child education, managing family expenses, insurance needs, and future goals.
  • Pre-retirement: involves retirement savings, investments, and debt management for better financial security after retirement.
  • Retirees: work on income planning, managing retirement funds, healthcare expenses, and others.

By Financial Goals

  • Retirement Planning: It requires you to have enough funds to spend your desired life after retirement. So, this includes strategies like choosing appropriate retirement plans, right investing, and managing withdrawals for mutual funds or other asset investments.
  • Investment Planning: In this stage, the focus is to grow your wealth through various investment options like stocks, bonds, mutual funds, and real estate. Also, consider the risk tolerance, investment horizon, and financial goals.
  • Debt Management: In this, you develop a plan to pay off debt efficiently and avoid unnecessary debt accumulation. Includes strategies like debt consolidation, prioritizing high-interest debts, and budgeting effectively.


To wrap up, the right strategies of financial planning must be followed to reach your desired goals in 2024. However, this is not just a plan for a year, but it is a way to craft a lifestyle for yourself that aligns with your values, and long-term goals. Personal finance has multiple layers, and financial planning is one of its types. And, it requires long-term commitment, that creates a strong financial foundation, goal-based investing, and asset allocation.



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