28 March 2017

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Mini Financial Plan for Standard Families


Family Financial Plan - (familyfinance.in)Every family, whether rich or ordinary, requires a financial plan. No doubts. There are lots of false assumptions, myths and ignorance in this area. Most of the people wrongly believe that, financial planning is only practicable and desirable for families with high earnings. They believe those families with sizable income can only spare enough funds to create financial planning through investing in various investment products. Most of the people wrongly believe that, financial planning meant only investing and which required high earnings. Because of such ignorance on the real meaning of a financial plan, most of the families move back from creating their on financial plan to secure their family.

I agree, investing is a step in financial planning.  However, anyone can do investing as their own with any amount. There are products in market that even allow low income families too, to invest in various products. This article tells you how to create a 'mini financial plan' that works best for low income families.

Financial planning generally meant financial safety of a family from various situations. It can be a sudden lose of job of a bread winner, a death of family head, a critical illness etc.. having a financial plan meant to protect all family members from the deep consequences by such situation. In this article, what a family required to do to protect all their members all the time.
 

Mini Financial Plan for your family can be planned and managed by yourself without much issues and with few actions. .

Step 1: Control your income and expenses: Have a written plan to control your income and expenses. A good, simple budget help you to go through following steps. Control your money and do not loose any of them unnecessarily, by having a budget.


Step 2: Think safety of your family members

Safety of your family members meant saving them from the impact of contingencies. You should have necessary protection from right insurance options to face such situations. A term insurance policy for the bread winner and a family medi-claim policy to protect all members in the family from the hospitalization expenses, are enough insurances for low income families. Premium for these insurances are cheap but the  safety would be high.

Step 3: Create and emergency fund
 

Creation of emergency fund can be done through depositing your balance amounts and income from other sources to a dedicated savings deposit. Do not touch this fund. This can also be done by equally contributing a small amount in each month to the savings account. One of the other best option is to open a recurring deposit (RD) account and transfer a small amount of money automatically in each month. 

Step 4: Investing 

Start a or two good mutual funds with investing very minimum amount in each month through Systematic Investment Plan. You can also open accounts like PPF and add small amounts in each months to take the advantages of compounding interest. 

Change the above option as you required by considering the money you have in your hands after all the expenses. If you follow the above steps systematically, it will help you to achieve financial discipline as well as creating wealth slowly.

To get more information on financial planning, have a look at the financial planning process chart by searching in this blog. This will provide your more idea on the area.