Five Point Checklist to Begin Financial Planning

financial planning

Each one of us has individual financial needs. Some are more complex than others. But no matter your situation, achieving financial success requires careful planning of your finances and expert guidance to meet your goals and objectives. Let’s look at this five-point checklist to help you set your future goals and build a unique plan for your financial freedom and security.

Goal setting

Your financial goals are targets that you wish to achieve over a specified period. It could be any dreams or plans that you have set for yourself or your family. For example, if you have a growing family, you will have a goal to buying a new home.

Similarly, there are short-term goals that you may want to reach within a year, such as buy a new computer or go on a family vacation. Likewise, midterm financial goals include financial targets that could take anywhere between 5 to 7 years to achieve. Long-term financial aims are those that take longer to accomplish. These include saving for your child’s education and saving for your own retirement

In order to set your financial goals you need to:

  • Know what matters to you.
  • Sort out what you want to achieve in the short, mid and long term.
  • Ensure your goals are SMART— Specific, Measurable, Achievable, Relevant and Timely.
  • Set or know the value of your goals and know how much you can keep aside to achieve those goals.
  • Set your priorities.
  • Establish a realistic budget to know what’s coming in and going out of your bank account and use it to plug financial leakages.
  • Keep monitoring the progress and ensure you are hitting benchmarks.

Asset Allocation

Now that you’ve set your goals, you need to achieve the right investment mix for a balanced portfolio. Regarded as one of the most important choices you can make, asset allocation shows you how much of your portfolio must be in income-producing investments and how much in growth-oriented investments.

Consider asset allocation as the fundamentals of portfolio design. There is no cookie-cutter approach or a perfect mix of assets that would apply to an individual strategy. Hence, when building the right asset allocation for your needs, consider the following key elements carefully

  • Objectives. What is it that you are hoping to achieve using your investments? Are you looking to achieve capital growth, fund a specific financial objective such as college education or pay down debt?
    • Risk tolerance. What is your comfort level with market volatility? Can you take in losses without panicking? Are you an aggressive investor willing to ride through the ups and downs of the market? When evaluating your risk appetite, take into account inflation and interest risks as well.
    • Time horizon. What is the length of time that you’re willing to commit to achieving your objectives?
    • Investment preferences. Do you have favorites among asset classes? Understand the features and characteristics of every asset class, their pros and cons, risks and rewards and your interest in them before investing.
    • Taxation. When you mix in a wide range of asset classes, it could have varying tax consequences. Remember to be mindful of them and factor in the taxes at the time of redemption.

When building a sound asset allocation strategy, remember to include periodic reviews as well. For instance, a shift in financial markets could change your financial situation. And with periodic gains and losses, your portfolio may require adjustments. As you go through your life stages, adjust your asset allocation strategy based on your requirements, preferences, risk tolerance and priorities.


 A good financial plan will provide for adequate Life and Health insurance, the lack of which can cause much turmoil. That’s because, in the event of your untimely demise, your family members, without your support and income, may be unable to meet the various financial goals you’ve set for them. For instance, your spouse’s retirement, children’s college funding, homeownership and any other plans you’ve laid down for your family could get hampered. Similarly, if you are not prepared for any medical emergencies with adequate health insurance for you and your family members any such incidents can severely dent your finances. In such incidents, you could be forced to withdraw from your investments that you had reserved for your future goals.

When looking at an insurance plan, consider the following factors to choose the appropriate insurance plan and cover.

  • Age
  • Debt
  • Family situation
  • Financial goals
  • Savings rate
  • Other financial obligations

Having an adequate insurance cover will grant you peace of mind and assurance to your loved ones even if you are no longer around to support them. Insurance planning is an essential part of a sound financial plan and can meet many life goals in your absence.

Tax Planning

When investing for your goals, there is a good reason to monitor the progress of your investments. But in addition to selecting the right investments and asset allocation, you also need to consider taxes and other costs.

Every financial decision you make has tax outcomes, and hence planning your taxes can help you avoid potential actions that could eat into your returns. When looking into tax planning:

  • Find out your taxable income and tax bracket.
    • Take optimal use of tax deductions that you qualify for.
    • Select suitable tax-efficient investments.
    • Selling or holding specific assets could impact your short-term capital gains and long-term capital gains.
    • Understand how to calculate your cost basis — the amount you pay for an investment in terms of brokerage fees and other charges.
    • When withdrawing from your investments, ensure they are tax-efficient.
    • Look for ways to transfer all gift assets to your heirs in tax-efficient ways.

A good financial plan with efficient tax planning encompasses various considerations, including when you invest, receive returns, purchase, spend, the type of investments you select, your income filing status and other deductions. When planning for your taxes, split them into three sections: 

  • Invest in tax saving instruments 
  • Find your tax payments 
  • Know your income tax returns 

Retirement Planning

When planning for your retirement, you need to start as soon as possible. When charting an effective retirement for your future, there are specific ingredients you need to look at to put yourself on the path to success. For instance:

  • Find out new expenses you may have to incur once you retire, such as healthcare expenses, lifestyle costs.
    • Look into those expenses that you can forget about, such as commuting to work, loan payments etc.
    • Establish your retirement budget by calculating your retirement expenses.
    • Figure out your revenue in retirement either through multiple or single income sources.

Planning for a financially comfortable retirement must be an ongoing process in your working years. And the sooner you begin, the better. Look into your plan at least once a year to understand whether you’re on track to achieve your goals. If required, make necessary adjustments.


It can be complex to navigate the world of finances but when you do it, you don’t have to do it alone.  A professionally qualified financial planner can help you with your financial plan by providing the right guidance and advice from his experience and expertise to overcome such complexities.  They can guide you in identifying the right financial products and services to meet your goals and that suit your lifestyle.

To enhance your financial security and know-how to find the right financial solutions for you, consult an experienced financial professional today.

First published in Financial Express.

To know more about financial planning services visit STEPS, the financial planning arm of Geojit Financial Services.


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