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A lot of people end up spending a lot of money or saving too little due to poor financial planning. However, many financial regrets can be avoided if one has a solid financial planning process and monthly budget in place. A good financial plan can help an individual deal with the precariousness of the unstable job economy. Before we can start with the list of financial regrets, let us first understand the importance of financial planning.
A good financial plan helps one achieve their short term and long term goals. Not only does a proper financial plan help you allot the right amount of money for current necessary expenses but can also help you save enough money to meet your future financial needs. One can also save money via proper tax planning, which involves a strategic investment in certain instruments. Thorough budgeting and prudent spending are the most important steps of financial planning. A proper financial planning process will also help you to create wealth over the years.
Not enough savings to meet your long term goals
The most common long-term goals for most people are buying a car, a house, getting married or travelling to an exotic location for holidays. All the goals have one thing in common; they are all expensive. Therefore, one needs a savings pool for the different goals and should start depositing money into these avenues periodically.
But most people fail to meet their financial targets because they indulge in impulsive shopping and instant gratification. This significantly increases their daily expenses, and they end up taking loans to meet their goals. And then, instead of saving money, one has to repay these loans for the rest of their lives.
However, with the help of a savings plan or an income plan, one can ensure that their current and future needs are taken care of. By choosing an appropriate savings plan, you can also ensure life insurance coverage for yourself and your loved ones with the added advantage of wise savings.
Not buying insurance at an early age
People have a misconception that they need a life insurance plan only after they start a family. However, by purchasing insurance early on in life, you not only save money by paying lower premiums but also earn enough time to start saving and build the funds over the years.
As a young earning individual, making the right financial decisions with regard to your insurance plans can enable you to protect your family and also build a robust financial corpus for the future. By starting early, you can save a reasonable amount of money each month without compromising on the daily expenses.
Not starting investments early
People often complain about not making the right investment decisions. Through proper financial planning and analysis, one can avoid investing their money in the wrong places and instead, opt for a wise savings cum investment plan based on their risk appetite, financial goals and the family’s monetary requirements.
Making early investments also helps you understand which avenues are better suited to your financial goals and your budget. For example, an income plan can be a great option if a low-risk investor is seeking guaranteed1 income from their savings.
Not maintaining a budget
Not maintaining a monthly budget is one of the most common mistakes in financial planning. When one does not maintain a budget, they might end up over-spending. This leads to a one’s entire income spent only on daily expenses with no scope for any savings.
To start maintaining a budget, one needs to plan out various expenses. After tracking and listing down their expenses, they will have to weed out the unnecessary costs. One should then start allocating the funds for essential expenses, loan repayments, savings and investments.
Not having additional riders# on life insurance
Bad health can destroy your wealth in a short span of time. Therefore, always make it a point to have an insurance policy that also provides an additional cover. A common mistake made by people is that they take a life insurance policy and do not bother to enhance the coverage. As a result, if the policyholder meets with an unfortunate accident or accidental death, their family is left with limited benefits from the insurance plan after covering the medical expenses.
Depending upon the life insurance plan you choose, it can provide your family with a death benefit, monthly income benefits and also maturity benefits.
The plans are flexible with multiple payout options and the choice of premium payments mode. There are also add-on riders# with which one can enhance the life cover protection. Tata AIA also provides life insurance policies with a critical illness benefit.
Talking to a financial advisor is one of the best ways to understand financial planning and analysis. But one can also learn about the financial planning process through research. It is never too late to start learning about finances.
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The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not a guaranteed issuance plan, and they will be subject to Company’s underwriting and acceptance.
For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry
#Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office.