​Thumb Rule of Financial Planning

Table of Contents

List of 22 Thumb Rules of Financial Planning

A Forward message on thumb rules of Financial Planning. 

After, reading all of them, I would suggest, if anyone could follows, it could help him to enter the path of Financial Freedom. Read it and try to adopt all of it into your life, it will help you in learning about the importance of Financial Planning. Though, it doesn’t guarantee you any kind of short-term/long-term goal achievement.
  1. Try to Use 30 % of your income for Monthly living expenses.
  2. Repay Liabilities from 30% of your income, if any.
  3. Save & Invest 30% of your income for future LIVING.
  4. Save 10% of your income must be spared for entertainments, vacations
  5. Build 6 months expenses must be available for Emergency Fund (should be invested in LIQUID FUND, FD Etc)
  6. The home loan must be registered and apply for both husband and wife name. (Both can get benefits on Home loan Tax benefits). Read: What things to consider before filling Income Tax Return File?
  7. Buying a second house for investment is not advisable ( Survey reports – it will fetch you only around 3% return)
  8. After 45 years of age, not supposed to enter into any BIG LIABILITIES (Higher education of children and wedding of children will happen around 45 to 50 only, so plan now for the same.)
  9. Have joint account at Bank savings account.
  10. The property must be registered on both Husband and wife name. (As per legal act – after husband first legal heir his wife, after wife it will go to children only)
  11. Regular check on Nominations at all financial instruments. if not nominated, do it now.
  12. Only in an insurance policy, Claims payable to Nominee. In other financial instruments, legal heirs certificate is must get back to the settlement
  13. Must have Term Insurance to financially secure future of your dependents.
  14. Don’t take any financial investment decisions EMOTIONALLY,  and also Avoid last minute tax saving investment decisions, plan well in advance.
  15. MEDI-CLAIM is must (in spite of Group media claim coverage given at office) (After retirement there is no media claim coverage, after 50-55 years of age, it’s very tough and costly to enter into media claim)
  16. For your jewelry LOCKER, Only one lakh is payable by the bank, if theft or fire happens at the bank. Provided insurance done.
  17. Like same way Government guaranteed only one lakh for your FD also. (Fixed deposits with Banks up to Rs. 1 lakh only are backed by deposit insurance). 
  18. Only LIC of India gives Guarantee.  Money payable in an LIC policy is Guaranteed to be paid in cash by Govt. Of India as a Sovereign Guarantee u/s 37 of LIC of India Act
  19. Must know all Tax implications. You cannot avoid paying tax. But you can minimize by way of tax planning and investments. Also read: How can a Financial Planner can help you in attaining Financial Goals
  20. All financial documents must be kept safely and keep family members informed of the same.
  21. Financial investments must be followed through a Personal Financial Planner.
  22. Review your portfolio at Every six months.
These all are the general suggestions on Personal Finance and Investment decisions which depends upon individual case to case basis.
Thus, it always suggest to consult with the Financial Planner (Thumb Rule No. 21) before making any Investment Decisions.

Source: Forward Message