Every responsible person needs financial discipline, (i.e.) a financial plan. Financial Planning means

(a) anticipating the future needs

(b) calculating the needs in terms of money and time frame and

(c) integrating the needs with savings/repaying capacity.

It includes planning for insurance, taxes, expenses, children’s education, home loan repayment and retirement. In other words, every person requires an integrated financial plan to suit his needs.

With joint family concept gradually eliminated from the society and longevity of people increasing, three most exigent needs of a common man today are:

(a) Wealth creation--children’s study/marriage

(b) Health protection for family members

(c) Retirement solutions.

The first step towards one’s financial planning is to have a PAN number and open a demat account and consolidate all types of investments in one place.

The following simple principles should be kept in mind to avoid any disaster in your financial matters:

1. If you have EMI commitments, the total loan EMI (housing, vehicle) should not exceed 25% of total income.

2. Basic life insurance cover need not be more than 100-150 times of normal monthly expenses.

3. If your family has unearned income (interest income, dividend income, rental income etc) which is substantially more than normal family needs, you do not really require insurance.

4. Choose insurance plans with flexible options to take care of children's needs/health care needs/retirement in future.

5. You can take a simple term insurance policy or Health Plus Life combo policy to cover risk.

6. For pure return purposes, you can choose mutual fund products as they are in a better position to give higher return because of lower charges

7. Always calculate the return on investment - net of taxes and tax benefits.

8. You should never play the stock market game with borrowed money.