The One-Page Financial Plan

May 2023
3 min read
1. In a world where things we once considered luxuries have somehow become necessities, it can be difficult to separate needs from wants. Achieving clarity about the difference between the two may prove to be one of the biggest challenges - but also one of the most rewarding ones.
2. The point of financial planning is not to cling to a false sense of security that you’ll know where you’ll be in 30 years - because you won’t. Plans change, the unexpected occurs, and we all know the John Lennon quote about life happening when we were busy making other plans.
3. Financial planning boils down to making the best guess we can about what goals will help us live the life we want. Don’t worry about getting it “right.” You can - and should - simply course-correct your guess when you notice yourself going off track.
4. Track every penny you spend for a set period of time - it doesn’t matter how small the cost. Maybe you’ll be tempted to leave off the couple of bucks you spend on a bottle of water, but that’s exactly the kind of expense that adds up and that we want to become aware of.
5. When we’re building a budget, there’s no way to predict one-time financial events, like the car breaking down or the furnace going on the fritz. We should set aside some money each month to help cushion ourselves against these financial shocks.
6. Instead of buying immediately, keep items in shopping cart for 72 hours. When you return to the site, you rarely feel as strongly about buying what’s in the cart. The process is not about denying yourself pleasure; it’s about separating what’s important from what isn’t.
7. Automate savings. Taking the thinking out of the process will save you from debating whether you should spend that money or save it.
8. Save one-time windfalls. Unless you’re in the process of paying off a serious consumer debt, put tax refunds, inheritances, or money you receive as a gift right into savings.
9. Only by separating economic need from emotional loss can you determine which life insurance is right for you. Otherwise, you’ll buy whatever the insurance salesperson is offering, and it may cost you in other areas of your financial life.
10. Paying down debt is an investment. Once you’ve identified the debts with the highest interest rates, you can pick them off one at a time. When you’re done with one, go to the next.
11. Don’t assume that you must own a home. Never buy a house solely because of the tax benefits. Borrowing a dollar to get 60 cents back in the form of a tax credit will only lead to disappointment - especially if it means you’ll have to sacrifice your most important goals.
12. Investing is one of those cool, rare things where we actually get rewarded for being lazy. Once you get it right, the less you do, the better.
13. Rebalancing is the 7th wonder of the investing world. Because the market is not stagnant, your allocation will shift. Periodically, you will need to go back into your portfolio & make sure the actual amount of money you have in each matches what is says in your plan.
14. Your financial advisor is the only one standing between you and the Big Mistake of buying high and selling low. You’re hiring them to do what you can’t: make emotional decisions about your portfolio.
PGIM India Asset Management Private Limited
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Email: care@pgimindia.co.in
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