Day 7: Review and Mistakes

It is important to regularly review your financial plan and adjust it as needed. This means monitoring your progress towards your goals and amending your budget, savings, and investments as needed.

For example, let us say you set a goal to save Rs.10,000 for a down payment on a house. After six months, you review your progress and realize that you have only saved Rs.3,000. This could be due to unexpected expenses or changes in your income. In this case, you may need to adjust your budget or savings plan to get back on track towards your goal.

Another example could be if you have invested in the stock market and the value of your investments has decreased significantly. In this case, you may need to review your investment strategy and amend minimize your losses and maximize your gains.

Regularly reviewing and adjusting your financial plan can help you stay on track towards achieving your goals and ensure that you are making the most of your money. It is a promising idea to set aside time each month or quarter to review your progress and make any necessary adjustments.

Mistakes while following this whole 7-day plan        

?There are several common mistakes that people make when creating a financial plan. Here are a few to keep in mind:

1.?????Creating a narrow plan:

One mistake people often make is creating a financial plan that is too narrow in scope. A good financial plan should be comprehensive and cover all areas of your life, not just one area like an investment portfolio.?This includes considering tax issues, risk management, estate planning, and long-term care needs?.

2.?????Failing to re-balance:

Another common mistake is creating a balanced portfolio but failing to re-balance it on a regular basis.?As the market changes, your portfolio balance can shift, so it is important to regularly review your portfolio and make any necessary adjustments to ensure it continues to match your financial plan?.

3.?????Excessive and frivolous spending:

It is easy to spend money on unimportant things without realizing how much they add up over time.?Avoiding excessive and frivolous spending can help you save money and stay on track towards achieving your financial goals?.

4.?????Living on borrowed money:

Using credit cards to buy essentials can be tempting, but it is important to remember that credit card interest rates can make the cost of those items much higher in the long run.?Avoiding living on borrowed money can help you avoid debt and stay financially stable?.

5. Ignoring retirement needs:

It is important to plan for retirement and ensure that you are saving enough to support yourself in your later years.?Ignoring retirement needs can lead to financial difficulties later in life?

How do I know if my financial plan is working?        

1.?????Comfort with your budget:

A budget is a plan for how you will spend your money each month. It helps you allocate your income towards your expenses, savings, and other financial goals. If you are able to stick to your budget and it is not causing you stress or worry, that is a good sign that your financial plan is working. For example, let us say you create a budget that allocates Rs.500 per month for groceries. If you are able to consistently stay within that budget and not feel stressed about it, that is a good sign that your financial plan is working.

2.?????Clear understanding of your financial goals:

Knowing your major financial goals and having a plan in place to achieve them is another sign that your financial plan is working. For example, let us say one of your financial goals is to save Rs.10,000 for a down payment on a house. If you have a clear understanding of how much you need to save each month to reach that goal and you are making progress towards it, that is a good sign that your financial plan is working.

3.?????Positive cash flow:

Measuring your cash flow, or how much you spend compared to how much you earn, can help you determine if you are heading in the right direction financially. If you are consistently spending less than you earn, that is a good sign that your financial plan is working. For example, let us say you earn Rs.4,000 per month and your expenses (including savings and investments) total Rs.3,500 per month. This means you have a positive cash flow of Rs.500 per month, which is a good sign that your financial plan is working.

4.?????Growth in savings and investments:

If your savings and investment balances are growing over time, which is another indicator that your financial plan is working. For example, let us say you start with Rs.5,000 in savings and invest Rs.500 per month. After one year, if your savings balance has grown to Rs.11,000 (assuming no interest or investment gains), that is a good sign that your financial plan is working.

This ends our 7 day newsletter on setting up a financial plan now we would start dealing with more new concepts from Monday.. Happy Weekend !!!!