Financial Planning: A Journey to Financial Freedom, Security, and Prosperity

Financial Planning is a common term, yet uncommon for many. It is more than just managing the money, but investing in the future to achieve short-term and long-term goals. In today’s dynamic environment, a robust financial plan is a necessity of the hour. Whether you aim to purchase your dream home, dream car, fund your child’s education, or ensure your relaxing and soothing retirement, a well-researched and structured financial plan serves as a solution to your financial goals and aspirations. It provides clarity and helps us to make informed decisions and pave the way for a secure and sustainable future.

The term Financial Planning

In our everyday life, we often listen to the words “Financial Planning,” but what is the real meaning of it? Financial Planning involves assessing your current financial health, setting up achievable goals, and creating a strategy for fulfilling those goals. It includes various aspects, including:

• Budgeting
• Managing expenses
• Developing saving habits
• Investing
• Planning for taxes

The primary objective is to ensure that you have enough resources to align your financial needs and aspirations.

Arvind’s Story: From Financial Chaos to Control

In 2018, at 28, Arvind Sharma seemed to have it all — a lucrative job in Pune’s IT sector, a brand-new bike, regular online shopping sprees, weekend outings, and even trips to Goa. His Instagram was filled with flashy snapshots of this lifestyle. But underneath the social media sheen was a stark reality: Arvind had no savings, no insurance, and no investments — just a pile of EMIs and bills. Financial planning had never crossed his mind.

The Turning Point

In 2020, when the pandemic struck, his company slashed salaries. That’s when reality hit hard. With just ₹4,780 in his bank account and no backup, Arvind was forced to confront his financial vulnerability. “What if I lose my job?” he wondered. This moment became the start of his financial transformation.

Step-by-Step: Arvind’s Financial Makeover

• Step 1: A Hard Look at Spending
  • Food delivery: ₹6,000/month
  • Unused subscriptions: ₹1,200/month
  • Credit card payments: ₹15,000/month
  • Rent: ₹15,000/month
  • Groceries: ₹12,000/month
  • Shopping: ₹15,000/month
  • Travel: ₹15,000/month
  • Savings & Investments: Zero
• Step 2: Learning the Basics
  • Budgeting gives freedom, not restriction.
  • Emergency funds are essential.
  • Insurance protects, it doesn’t burden.
  • Investing is necessary to stay ahead of inflation.
  • Financial planning is a form of life planning.
• Step 3: Budgeting with the 50-30-20 Rule
  • 50% for needs (rent, food, EMIs)
  • 30% for wants (entertainment, lifestyle)
  • 20% for savings and investments
• Step 4: Creating an Emergency FundHe allocated ₹2,00,000 into a liquid mutual fund, enough for three months of expenses. Pro Tip: Emergency funds are like umbrellas — you may not need them every day, but they’re indispensable when it rains.
• Step 5: Getting Insured
  • Term life insurance of ₹1 crore or more, depending upon the need.
  • Health insurance worth ₹25 lakhs covering him and his family
• Step 6: Smart Investing through SIPs
  • ₹5,000/month in ELSS for tax benefits
  • ₹4,000/month in equity mutual funds for long-term growth
  • ₹2,000/month in hybrid funds for mid-term goals
• Step 7: Behavioural Changes
  • Stopped EMI-financed gadgets
  • Avoided peer pressure for expensive outings
  • Resisted tempting but unnecessary sales

Where Arvind Stands Today

• ₹3.9 lakhs in mutual fund investments (approx.)
• ₹2,00,000 in emergency savings
• Comprehensive insurance coverage
• Peace of mind

“I don’t stress about money anymore. I take charge of it now — that’s the power of financial planning.”

Lessons from Arvind’s Journey

• Start Small, Start Now – Don’t wait for a big salary to begin.
• Plan, Don’t Just Earn – Income without planning leads nowhere.
• Automate Savings – Treat saving like a bill to be paid, not a leftover.
• Secure, Then Grow – Get insured and build your emergency cushion first.
• Track and Tweak – Financial planning is a continuous process, not a one-time task.

Vikas Garg
Assistant Manager
Centre for Content Creation (CCC)
National Institute of Securities Markets (NISM)

Disclaimer: The story narrated above by the writer is intended solely for educational and informational purposes. It doesn’t represent the views of the NISM. Readers are advised to consult SEBI-registered Investment Advisors before making investments or financial decisions.