4 Step process to create your financial plan
1) Create an emergency fund: Save and keep 6-12 months of expenses in easy to access options like cash, savings account, fixed deposits and liquid mutual funds.
2) Buy Life and health insurance: Life insurance to protect your dependents and health insurance to avoid sudden medical bills which can erode your savings. Even if you are covered under your employer group life and health policies, it is a good idea to buy your personal insurance policies.
3) Setup automatic investments for your life goals: Identity your major life goals with timeframe and target amount and setup automatic investments at regular intervals into various investments like PPF, EPF, SIPs in equity or debt funds etc. to achieve your goals.
4) Monitor the progress at regular intervals and take corrective actions: Last and the most important step is to track and monitor your investments at certain intervals like Yearly and take any required action. If any investment is not performing well consistently then you can replace it. If your income has increased then you can increase your investment amount to reach your goals faster.
