Formalising your Financial Plan in uncertain times

Image for post
Image for post
Photo by William Iven on Unsplash

We all are working towards some financial goal like paying off existing loans, planning for child’s higher education or down payment for your dream home even though we may not have written it down.

COVID-2019 uncertainties have helped us to focus on priorities and by formalising our plan we can really do the math to achieve our goals.

Essential ingredients of your financial plan:

1) Expense Management: COVID-2019 has taught us that there are certain expenses that are really wasteful and can easily be avoided. We should have a target Expense to Income Ratio of let say 50%-60% so that we are saving enough for our future goals.

2) Asset Mix: We should consult a financial advisor to build an asset portfolio which is a judicious mix of equities (direct or mutual fund), fixed income and alternative assets like gold or house property. This portfolio should address our short term, medium term and long-term needs. Even though there may be short term volatility but we should avoid any haphazard buying or selling decisions.

3) Understanding power of compounding: It simply means money earned on reinvested savings. It creates a chain reaction by generating returns on the returns as long as your money remains invested in the financial instrument. Starting early, maintaining patience and discipline are keys to truly enjoy the benefits of compounded returns.

4) Insurance Coverage: A recent study has pointed out that In India only 4% of covid patient had health insurance and only 2% have filed for death claims thus causing greater financial pains to affected ones. Every income earning individual should have an appropriate term insurance cover and family health cover to face any eventuality.

5) Emergency Cash: Every individual should have 3–6 months expenses invested in liquid assets like cash, saving account, liquid funds or short-term fixed deposits. This cash reserve will help face any short-term uncertainty or unplanned expense without disturbing our long-term asset portfolio.

6) Instant Loan from Phocket: There are bound to be income or expense fluctuations in short term like due to Covid-2019 a lot of people are facing pay cuts, job losses and unexpected medical expenses. Phocket offers instant and affordable access to cash so that people stay true their financial plan and achieve their life goals.

Written by

Phocket is a fintech company where a salaried professional can take an instant short-term loan of up to Rs 1 lac for a period ranging from 7–110 days

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store