No matter how much we earn, our savings is the real reflection of our earning. Living paycheck to paycheck is the riskiest thing one would be doing in modern days. Some of us understand this and make sure to save every month without fail. The issue here is saving without any financial planning. Neither I am a financial planner nor this blog is about financial planning advises, so no strict advice and just approaches. What we can discuss is the minimalist financial planning we all need. We have lots of insurance plans available, savings options with their own set of pros and cons.
There are lots of advisors, financial planners who will charge a bomb to give their guidance based on our risk appetite. We have various schemes like PPF, Bank FD, Mutual Funds, Index Funds, Pension Funds, ELSS funds, etc. To know more about each of them you can visit AssetYogi, here we will discuss the 5 generic things we all must do to have a secure future.
- Have Liquid Savings: The most important step in minimalist financial planning or for the matter of fact in any kind of financial planning is liquid cash. No matter whatever our investment strategy is, we must have enough savings for the Winter(the rough days). The safe number is 3-6 months of living expenses. In the case, if we lose our job or suffer some fatal accidents, we must have enough money to pay our bills for a few months. This is a must-have at all the time in our bank account and should only be used as the last option ever.
- Term Insurance: There are many kinds of insurance in India, out of all the one which actually holds true for the name are term insurance. Rest all are a mix of Insurance and savings while serving any purpose properly. A good value of term insurance can be done for less money which can provide a lot of support to the family in the worst phase of life.
- Mutual Funds: Whether we are minimalist or not, we all want to save money from Tax. As part of 80C for most of the employees, tax savings are necessary. Mutual funds come as the best option with a history of providing maximum return. Since the return is high and as well as compounded, a small and regular investment can provide a very good return in the long run.
- PPF: For those who are risk-averse and are not sure to put all their mandatory 80C savings into Mutual funds due to its volatility can choose PPF. PPF is guaranteed by the Indian government with its own locking of 15 years. This provides a very high level of security for the investment with a moderate and compounded tax-free returns.
- Health-Insurance: Uncertainty is the biggest form of surprise. None of us know, what’s next. In order to be secure with any uneventful events, decent coverage of health insurance can save us a lot of money. With the rising medical expense, health insurance can come very handy and supportive in any unaccounted events.
Personally, these 5 step steps minimalist financial planning covers all the major aspects of a person’s life. Anything on top of this is a personal choice and there is no limit for investment. Once these 5 steps are taken care of, a person can be confident of taking some bold steps like starting a business or taking some holiday trip.
Feel free to add your thoughts and ideas about minimalist financial planning. If you find this article helpful, please do share it in your network.