Thumb rules for financial planning help when you have not set financial goals, or are a beginner.
However, the value of thumb rules lies in the direction it can give your budget and financial plan
21 THUMB RULES FOR FINANCIAL PLANNING
1. Reserve 30 % of your income for *monthly living expenses.*
2. Use 30% of your income for *Liabilities repayments*, if any..
3. Save and invest 30% of your income for your future LIVING.
4. Spare 10% of your income for *entertainments, vacations*
5. Retain an amount equal to 6 months expenses for *emergency fund* (should be invested in LIQUID FUND, FD Etc)
6. *Home loan* must be registered and apply on both *husband and wife name.* (Both can get benefits on Home loan Tax benefits)
7. Do not buy *second house for investment. * ( _Survey reports – it will fetch you only around 3% return_)
8. Do not take on BIG LIABILITIES After 45 years of age, (Higher education of children and wedding of children will happen around 45 to 50 only, so plan now for the same.)
9. Have a joint account @ Bank savings account.
10. Property must be *registered on both Husband and wife name*. (As per legal act – after husband first legal heir is wife, after wife it will go to children only)
11. Do a regular check on *Nominations at all financial instruments.* Register a nomination, if you’ve not done it so far.
12. Claims are payable to nominee only in insurance policy. In other financial instruments legal heirs certificate is must to get back the settlement
13. Must have *Term Insurance* to financially secure future of your dependants.. *Conventional Insurance products* can serve as Debt oriented investments and provide assured returns in the present falling interest regime with Tax benefits.
14. Don’t take any financial investment decisions EMOTIONALLY. Avoid last minute tax saving investment decisions, plan well in advance.
15. MEDICLAIM is a must (in spite of Group mediclaim coverage given at office) (After retirement there is no mediclaim coverage, after 50-55 years of age, it’s very tough and costly to enter into mediclaim)
16. If you lose contents of your locker due to proven negligence of bank, an amount equivalent to 100 times the locker rent is payable to you.
17. Like same way *Government guaranteed only one lakh for your FD* also. (Fixed deposits with Banks upto Rs. 1 lakh only are backed by deposit insurance)
18. Understand tax implications of your financial activity. You cannot avoid paying tax. But you can minimise by way of tax planning and investments..
19. Keep All *financial documents safely* and keep family members informed of the same..
20. *Financial investments* must be followed through *personal financial advisor..*
21. *Review your portfolio at every six month..*
_*These are general suggestions, personal Finance and investment decisions depends upon case to case*_
Development Officer, LIC of India