As financial year 2025-26 (FY26) begins, it is a perfect opportunity to revisit the fundamentals of financial planning. Why is it essential to have a structured financial plan? How can you create one tailored to your needs? To guide us, CNBC-TV18 spoke to Kalpesh Ashar, CFP (certified financial planner) and a registered investment adviser; and Prableen Bajpai, Founder, FinFix Research & Analytics, both experts in financial planning and wealth management.
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Financial planning has evolved significantly over the last two decades. “Earlier, people only thought about markets and fixed deposits. Now, financial planning is more about life planning,” says Ashar. While awareness about investing and wealth-building has grown, many still focus only on picking the best-performing mutual fund or stock.
However, as Prableen Bajpai points out, a holistic approach is necessary: “Investment and tax planning are just parts of the bigger picture. The foundation lies in understanding cash flow, net worth, and financial goals.”
The four pillars of financial planning
A well-structured financial plan consists of four key components:
- Cash flow management: This involves tracking income and expenses to ensure a surplus for investment.
- Net worth assessment: Understanding assets (stocks, mutual funds, real estate) and liabilities (loans, credit card dues) helps in financial decision-making.
- Goal-based planning: Financial goals must be clearly defined as short-term, medium-term, and long-term, ensuring investments align with these objectives.
- Risk management: Adequate insurance coverage and a contingency fund help protect against unforeseen events.
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Real-life application: A case study
To illustrate the importance of financial planning, consider Jaya, a 30-year-old professional earning ₹75,000 per month. She has two financial goals:
- Accumulating ₹20 lakh for travel
- Building a retirement corpus of ₹18 crore by age 50
Currently, she saves ₹40,000 per month, a commendable 50% of her salary. However, as Bajpai highlights, achieving an ₹18-crore retirement corpus would require a much higher monthly investment, around ₹1.8 lakh. “A step-up strategy, where she increases her investment as her salary grows, could help bridge the gap,” she suggests.
For her travel goal, Ashar advises allocating bonuses or lump-sum earnings rather than solely relying on SIPs. “Instead of waiting five years to accumulate ₹20 lakh, she can use bonuses or salary hikes to fund her travels earlier,” he says.
Creating a financial plan requires discipline and adaptability. While Jaya’s example highlights the importance of setting realistic goals, the key takeaway is that financial planning is a continuous process.
For the entire discussion, watch the accompanying video
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(Edited by : Shoma Bhattacharjee)