The Simple Rupee:Balance Sheet,a useful tool

1. The Balance Sheet is a very important source for helping you gauge your need for Life Insurance.If you've read my previous article ,you will recollect my having written about liabilities (what you owe).No one would like to pass on the burden of outstanding debts to their loved ones.This is where the Balance Sheet can help you decide the quantum of Life Insurance you should have so that your loved ones are left with enough to clear the debts as well as live comfortably in the event of any untoward incident.
2. The Balance Sheet can help you allocate your investments properly so that you get a decent rate of return (more than what the banks,NSCs and GOI Bonds have to offer!).
3. The Balance Sheet can help you plan for your retirement.Unless you know what is coming in and what is going out,how are you going to know how much to save towards your retirement goal?
4.Planning your Will:You need to know what your assets are before you decide what you want done with them.
5.Moving towards your goals:If you get into the habit of preparing annual balnce sheets and comparing these with the previous year's totals,you can assess how much closer you are to your goal(s).You can make the necessary adjustments when required.
I do not claim to be a financial advisor.Please don't construe this as financial advice.But as I said in the beginning,there may be someone who gains a new insight into their finances through my journey.
First published by me on my blog :ALL THINGS GOOD

The Simple Rupee:Gathering Data

In this article,I will discuss one of the most important steps in Financial Planning:
Gathering Data.What this means is that you need to know what is coming in and what is going out.One of the best tools to record this is a Balance Sheet.This is a list of everything you own (your ASSETS) and everything you owe (your LIABILITIES).This is like a snapshot of your financial picture.This changes in every moment of time.Moreover,it can also help in giving you an idea of where you stand and where you will be in the near or distant future.Your Balance Sheet gives you your NET WORTH (Assets-Liabilities).This can either be a positive or a negative figure.Of course,everyone would love to have the former!An example of what can be listed in Assets :
1.All the cash you have right now.
2. All the money in your Savings Accounts.
3. The cash value of your life insurance policies.
INVESTED ASSETS.For eg.
1.Stocks and Mutual Funds.
2.GOI Bonds.
3. Pension Funds.
Other assets like.1.Your home2.Property3.Vehicles4.Personal property5.Antiques,paintings,works of art.
LIABILITIES may include:
1.Loans of all kinds
2.Credit card debts
This is by no means an exhaustive list of assets and liabilities.I have given examples of what you will commonly find in a balance sheet.Once you list out your assets and liabilities in a balance sheet in two columns,it becomes easier to assess your Net Worth.In my next article,I will try and explain how useful a Balance Sheet can be as a tool in your Financial Planning.

The Simple Rupee:Establishing Financial Goals

In my previous article,I had wtitten about the six- step process for Financial Planning. I will be taking up each step separately and will elaborate some more on each step.My endeavour is to present this in an easy -to- understand manner.Though the process of Financial Planning is applicable to all,I would like to direct these articles especially to the younger lot who are just setting out on the path to financial freedom.Savings is definitely not the primary focus in our lives when we think we have our whole life ahead of us!But let me tell you that attaining financial 'nirvana' is far easier when you start early."When you keep saying you will do it tomorrow,then your tomorrow will never come."Let's begin with the first step:
Establishing Financial Goals.All of us have different desires.It is important to identify your desires and financials goals.What are you saving for?Could it be for,
1. College education
2. Marriage
3. Buying a house
4. Travelling the world
5. An emergency fund
6. That laptop you've always wanted?
I don't know what your desire is but if you have to chart a course from point A to point B, you need a map.Similarly,if you have a financial goal,you need to be more specific than merely saying,"I want to be rich."You must quantify your goal in rupee amounts and time frames."I want a million bucks by the time I'm twenty-five is more specific !The main thing is,you need to have a vision of where you want to be or you will probably never get there.
I end this article with a quote from Ralph Waldo Emerson,Shallow men believe in luck;Wise men in cause and effect.