Mini Financial Plan for Standard Families

Every family, whether rich or standard, 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 create financial plan.

Most of the people wrongly believe that, financial planning meant only saving and investing and which required lots of money. Because of such ignorance on the real meaning of financial planning, most of the families move back from creating their own personal financial plan to secure their family.

I agree, investing is involved in financial planning, but that is just a branch in the personal financial planning tree.  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 suitable products. 

This article tells you how to create a ‘financial plan for small families’ that works best for standard families with limited income.

Why financial planning is important?

Financial planning generally meant financial safety of a family from various difficult situations as well as lead a comfortable life. Uncertainties such as sudden lose of job of the bread winner, a death of family head or even a critical illness etc.. can happen at any time. Having a proper financial plan will protect you and family members from such deep consequences to a great extend. .

Mini Financial Plan for standard families included only important points in simple 4 steps that can be followed easily.

Step 1: Control your income and expenses

Have a written plan to control your income and expenses. A good, simple budget help you on this. Families should have control over income and expenditure by creating and maintaining a proper budget. How to create a family budget? Have a look at this article.

Step 2: Think about the safety of self and 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 uncertainties.

A term insurance policy for the bread winner and a family health policy covering all the members in the family is more than sufficient. Premium for these insurances are cheap, but it is truly safe. Click to read here more about insurance.

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 account. Budgeting will help you to identify the savings in your hand at the end of each months. You can utilize this balance for EMI payment, creation of emergency fund etc.

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 small amount of money automatically in each month. Visit this article to know more about how to create an emergency fund.

Step 4: Investing 

Start a or two good mutual funds or index funds to invest minimum amount in each month through Systematic Investment Plan. This would help you to create a considerable wealth for long time.

Increase or decrease the investing amount time to time considering the savings in your hand. 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 which help you to understand the process with an illustrated chart.

Ask me if you have questions or comments. Best wishes.