Is Finance Leading You A Dance

First, lets really understand what a financial plan is. It is, very simply, a series of steps followed by an individual or business, the progressive and cumulative attainment of which are designed to accomplish a financial goal or set of circumstances for example, elimination of debt, retirement preparedness etc. This often includes a budget which organizes an individuals finances and sometimes includes a series of steps or specific goals for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings.
Financial planning is not as difficult as it may seem, and it is not the exclusive preserve of the number crunchers. The cartoonist Scott
Adams, creator the Dilbert comic strip, is a case in point. He has a degree in economics, an MBA and has worked in a bank (talk of left and right brains coming together!). He sugar-coats sound financial advice with humour so it becomes easier to swallow.
Adams says he wanted to write a book on Everything you need to know about investing but found that all he wanted to say could be said in just one page. These are his exact words:

Make a will.
Pay off your credit card balance
Get term insurance if you have a family to support
Fund your companys 401K (the equivalent for us: PF)
Fund your IRA to the maximum (the equivalent for us: investment available under Sec 80C and now you can add RGESS)
Put six months expenses in a money market account
Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any brokerage company and never touch it till retirement (this is precisely what balanced funds offer us in India)
If any of this confuses you, or you have something special going on (retirement, college planning, tax issue), he goes on to say, hire a fee-based financial planner, not one who charges a percentage of your portfolio.

Everything else you might want to do with your money, Scott concludes, is a bad idea compared to whats on my one-page summary. Sound advice.

Financial planning is, after all, not so very different from business planning. You have to make an honest assessment of your resources and liabilities; set goals; create a plan; execute it diligently ; monitor your plan and do a re-assessment if the situation demands it. Besides, business plans and financial plans are closely inter-linked. You cant make a business plan without a good financial plan backing it.
By the way, good financial planning is closer home than one might think. In fact, it can be found at home without the fee one might need to pay a financial planner. Who better than the home-maker to work to a budget, find innovative ways to make it stretch? Recognise the CEO and CFO in your home? And she works pro bono (except may be for a Divali bonus to spend at the jewellers).