Personal Financial Planning



Submitted to:
Miss. Nitika Sehgal

Submitted by:
Name : Abhinav Singh Roll No. : B38 Reg. No.: 10900963 Section: RS1902

Personal Financial Planning

Financial planning is often thought of as a way to manage debt, but a good financial plan really is a way to make certain that you have financial security throughout your life. Many small business owners consider their business as their investment in their future, but that is a huge risk to take. The essential components of a good financial plan are investing, retirement planning, insurance, borrowing and using credit, tax planning, having a will, and ensuring the right people receive your assets. Financial planning is the process of meeting your life goals through the proper management of your finances. Life goals can include buying a home, saving for your child's education or planning for retirement.

Income and expenditure account: This is the account which is prepared for record the inflow s
and outflow s of the income and expenditure of the individual, firm, company, and any organization. I am taking this tool of accounting for managing or recording the inflows and outflows of my family and myself also. We have our family business running by my father and brother.

Income and Expenditure account for the year
Father Brother



47500 15000 144000 24000 17000 96000 96000 4800 2400 12000 12000 12000 4800 1500 1000 80000 90000

420000 Interest Paid 240000 Electricity Bill Kitchen(Food) Vehicles(Servicing) Insurance Premium travelling Expenses Clothes Gas Water Telephone expenses medical expenses insurance auto cable T.V. House tax Road tax fees Education Surplus(transfer to balance sheet)

Personal Financial Planning
660000 660000

Balance Sheet for the year

Liabilities Capital Reserves and surplus Loan(education) Creditors Bank overdraft Auto Loan Outstanding expenses Bank credit cards

Amount Assets 1000000 House 90000 Vehicles 300000 250000 50000 100000 Laptop

Amount 4000000

Passion Pulsar ALTO

30000 40000 275000 35000 25000 100000 19000 50000 150000 10000 25000 66000 4825000

60000 Desktop 150000 Machinery Mobile Phones Cash in Hand Cash at Bank SBI Syndicate Bank(my) PNB ICICI 2000000

List of Financial services organizations which are used by my Family
y y y y State Bank of India(SBI) Punjab National Bank (PNB) Syndicate Bank ICICI Bank

Personal Financial Planning y Life insurance Corporation y Bajaj Alliance y Post office y Co-operative Societies

Current Economic Factors: Inflation:

Year JAN FEB Mar APR May 2010 16.22 14.86 14.86 13.33 13.73 2009 10.45 9.63 8.03 8.7 8.63 2008 5.51 5.47 7.87 7.81 7.75 2007 6.72 7.56 6.72 6.67 6.61


Sep Oct Nov Dec 10.67 9.29 11.89 11.64 11.64 11.49 13.51 14.97 7.69 8.33 9.77 9.77 10.45 10.45 9.7 5.69 6.45 6.4 6.4 5.51 5.51 5.51




Affect of inflation rate: The high rate of inflation affects negatively on the budget of my family. Normally inflation rate increases the prices of the commodities which increase the budget of house. My family is depending on the business therefore inflation plays a very important role in our family.

Personal Financial Planning

GDP (Gross Domestic Product)
After almost 7% growth in 2008/09 fiscal year, in the first three months of 2010 India's economy expanded 8.6% boosted by industrial production and services. But, is the third largest economy in Asia able to keep its high rate of growth? Years Growth Rate
2004 2005 2006 8.40% 2007 9.20% 2008 9.00% 2009 7.40% 2010 8.60%

8.30% 6.20%

10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00%

9.20% 8.30% 6.20% 8.40%

9% 7.40%









8.30% 6.20% 8.40% 9.20% 9% 7.40% 8.60%

Interest Rate: Following are the current interest rates for the different accounts: Account Type Saving Account Fixed Deposit Account Interest Rate 3.5 % 6 to 12%

Personal Financial Planning

Personal financial goals
The most important and tough goal in an individual¶s life is setting up long term goals to help him/her financially. It can be anything from savings to house building to children¶s education or marriage to retirement plan. These are the basic dreams when a person enters into a job. When a person achieves these goals he/she feels successful and also sometimes elated in the society. If setting up a goal is a big task then the toughest task is to achieve them and plan how to achieve them. There are some definite triggers that a person can use to achieve his/her goals. An urge to do something, certain important events in one¶s life etc are the biggest clue to accomplish it. Following are my personal financial goals:-

Short term goals: 
    Getting a good job. Purchase another multimedia mobile phone expensive then my current mobile. Save money from my monthly budget for going to ³Vaishno Devi Temple´ in holidays. Maintain reserves for shopping in next month. Complete my last year of MBA with minimum money.

Long term goals:

It includes cutting down discretionary expenses and being economical. A corpus of substantial amount which can then be used to buy plans for regular monthly income is an effective use of the savings. I want to save money for my future needs and also for the
marriage of my younger sister. It also helps me to fulfill the immediate expenses and future uncertainty.

Education: The most costly thing now-a-days is children¶s education. We definitely want our children to get the best education by sending them to the best universities. Some of the banks are giving loans at a very reasonable interest rate. We can afford to get these loans and provide them with best universities education without losing our minimal expenses. Most of the banks are giving options for investment into child¶s future plans from the moment a child is born. These investments cost less and they take a yearly amount and these investments also go for a short period giving us long term returns. We need to take our valuable time to study these company portfolios and details of the investments so that our money is invested in the right plans.

Personal Financial Planning

House: Building a house is the dream of every person; and also according to his/her tastes and convenience. Most of the banks are giving loans with a reasonable interest rate for the construction of the house. But for obtaining this we need to study carefully to what amount we can take loan so that we are not financially down and we meet our family¶s and also our daily or monthly expenses. Any unnecessary expenditure is to be cut down like dining out every weekend or unnecessary shopping. Medical Insurance: Of all the long term investments the most important one is medical investment. What if we have everything but health? Different countries have different format to support medical costs. You need to evaluate what work best for you in term of emergencies or during the fag years of life and then opt for it.

     Purchase a brand new car from my money. Go on the tours with my family on my expenses. Maintain the funds for the immediate expenses. Make reserves and surplus to meet the future uncertainty. Increase the standard of living in the society. Invest the money in the future plans.

Process of Personal financial planning
The personal financial planning process is as follows:  Setting goals with the client This step is meant to identify where the client wants to go in terms of his finances and life.  Gathering relevant information on the client This would include the qualitative and quantitative aspects of the client's financial and relevant non-financial situation.  Analyzing the information the information gathered is analyzed so that the client's situation is properly understood. This includes determining whether there are sufficient resources to reach the client's goals and what those resources are.  Constructing a financial plan Based on the understanding of what the client wants in the future and his current financial status, a roadmap to the client goals is drawn to facilitate the achievements of those goals.  Implementing the strategies in the plan Guided by the financial plan, the strategies outlined in the plan are implemented using the resources allocated for the purpose.  Monitoring implementation and reviewing the plan The implementation process is closely monitored to ensure it stays in alignment to the client's goals. Periodic reviews are undertaken to check for misalignment and changes in the client's situation. If there is any significant change to the client's situation, the strategies and goals in the financial plan are revised accordingly.

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