Section 1: Emergency Fund Guidance

What Is an Emergency Fund?

An emergency fund is money kept aside in a safe, liquid place to cover unexpected expenses or loss of income. It prevents you from taking costly loans or liquidating long‑term investments at the wrong time.

Why You Need an Emergency Fund

• Job loss or business slowdown.
• Medical emergencies or hospitalization.
• Major home or vehicle repairs.
• Family emergencies or unplanned travel.
• Peace of mind and reduced financial stress.

How Much Should You Save?

Monthly Calculation Framework

Step 1: Calculate Your Monthly Expenses

• Fixed expenses (rent, EMI, insurance, utilities): ₹ _____________
• Variable expenses (groceries, fuel, transport): ₹ _____________
• Other essential commitments: ₹ _____________
• Total Monthly Expenses: ₹ _____________

Step 2: Determine Your Target Amount

Target emergency fund = Monthly expenses × Number of months of cushion you want.

Your Target Amount: ₹ _____________ (₹ _____________ × _____ months)

Step 3: Choose Your Parking Option

• [ ] High‑yield savings account.
• [ ] Money market / liquid mutual fund.
• [ ] Short‑term recurring deposit.
• [ ] Combination of savings + fixed deposits.

Step 4: Create Your Savings Plan

• Monthly contribution required = Target amount ÷ Number of months available.
• Monthly Contribution: ₹ _____________.
• Set automatic transfer on salary credit date.
• Avoid using this fund except for genuine emergencies.

Step 5: Track Your Progress

Section 2: Insurance Needs Assessment

Insurance protects your financial plan from being derailed by major life events. Use this section to estimate the right coverage and close critical gaps.

Life Insurance

Who Should Consider Life Cover?

• Primary earning members of the family.
• Parents with dependent children.
• Individuals with large outstanding loans.
• Anyone whose income supports dependents.

How Much Life Insurance?

Use any of these practical approaches:

• Income method: 10–12 × annual income.
• Needs method: Outstanding loans + future goals (education, marriage, etc.).
• Minimum safety net: At least ₹ 25 lakh if income‑based cover is low.

Your Life Insurance Need:

• Annual income: ₹ _____________
• Recommended cover (10–12×): ₹ _____________
• Outstanding debt: ₹ _____________
• Future obligations (education, etc.): ₹ _____________
• Total cover needed: ₹ _____________

Term vs Traditional Plans

• Term insurance: Pure risk cover, higher sum assured at low premium, ideal for most families.
• Endowment / money‑back / whole life: Insurance plus savings, higher premiums, use only when clearly required.

Health Insurance

Hospitalization costs can wipe out savings and emergency funds. Adequate health insurance is essential even when employer coverage exists.

Suggested Cover Levels

Key Features to Look For

• In‑patient hospitalization with sufficient room rent limits.
• Pre‑ and post‑hospitalization coverage for 30–60 days or more.
• Day‑care procedures and cashless hospital network.
• No‑claim bonus benefits and reasonable waiting periods.
• Optional: maternity, critical illness rider, OPD where relevant.

Disability / Income Protection

Long‑term disability can stop income completely while expenses continue. Income protection cover helps maintain cash flow in such scenarios.

• Target replacement: 60–70% of monthly income.
• Benefit period: ideally till planned retirement age.
• Waiting period: align with the size of your emergency fund.

Property & Vehicle Insurance

• Home: insure structure and contents, add disaster riders where necessary.
• Vehicle: ensure valid third‑party cover and consider comprehensive cover.
• Review sums insured annually for adequacy.

Section 3: Investment Planning Steps

Prerequisites Before Investing

• [ ] Emergency fund in place (or plan actively running).
• [ ] High‑interest debt under control or repaid.
• [ ] Essential insurance covers implemented.
• [ ] Basic monthly budget understood and tracked.

Step 1: Define Your Goals

List all major financial goals with timeline and target amount.

Step 2: Understand Your Risk Profile

Match investment choices to risk capacity and time horizon.

• Conservative: short horizon, low volatility tolerance, more debt and deposits.
• Moderate: balanced mix of equity and debt, 5–15 year horizon.
• Aggressive: long horizon, comfortable with market swings, higher equity exposure.

Your Profile: Conservative / Moderate / Aggressive

Step 3: Decide Asset Allocation

Indicative allocation examples (to be customized):

• Age 25–35: higher equity, lower debt and cash.
• Age 35–50: balanced equity and debt.
• Age 50+: more stability with higher fixed‑income share.

Your Target Allocation (by percentage):

• Equity: _____ %
• Debt / fixed income: _____ %
• Real estate: _____ %
• Cash / gold: _____ %

Step 4: Choose Investment Vehicles

Use simple, diversified instruments as core holdings:

• Equity mutual funds (large cap, index, flexi‑cap) for long‑term growth.
• Debt funds, PPF, EPF, high‑quality bonds for stability.
• Goal‑linked SIPs mapped to specific objectives.
• Direct equity only if you have the time and skill to research.

Step 5: Create a Monthly Investment Plan

Step 6: Monitor & Rebalance

• Quarterly: check SIPs, review performance, note life changes.
• Annually: rebalance portfolio back to target allocation.
• On big life events: re‑evaluate goals and protection needs.

Section 4: Retirement Readiness

Clarify Your Retirement Picture

• [ ] Target retirement age: _____ years.
• [ ] Expected monthly expenses in today’s value: ₹ _____________.
• [ ] Expected lifestyle (same, higher, or lower than now).
• [ ] Planned place of living (own house / rented / different city).

Estimate Retirement Corpus

Key steps:

• Project monthly expenses at retirement by adjusting for inflation.
• Convert monthly expense to yearly figure.
• Multiply by expected years in retirement (for example, 25 years).
• Apply a safety factor to account for investment returns and uncertainties.

Your Estimated Retirement Corpus Required: ₹ _____________

Identify Retirement Income Sources

Annual expense at retirement: ₹ _____________

Annual income from all sources: ₹ _____________

Annual shortfall to be funded by corpus: ₹ _____________

Convert Gap to Monthly Saving

• Note current retirement savings (EPF, PPF, NPS, mutual funds).
• Estimate their future value using a reasonable growth rate.
• Calculate the additional corpus still required.
• Use that gap, number of years to retirement, and expected return to estimate required monthly SIP.

Monthly SIP for retirement goal: ₹ _____________

Section 5: Tax Planning Tips

Thoughtful tax planning can meaningfully increase your investible surplus and bring you closer to your long‑term goals. Use this section as a high‑level checklist and always refer to latest rules before investing.

Key Deduction Buckets to Review

• Common deduction sections for individuals (for example, 80C, 80D, 80E etc.).
• Housing‑related benefits where applicable.
• Retirement‑linked deductions (like eligible NPS contributions).
• Small savings and interest‑related deductions within limits.

Year‑Round Tax Planning Rhythm

Beginning of Financial Year

• Decide target amount to invest in eligible tax‑saving instruments.
• Spread investments across the year instead of last‑minute lump sum.
• Align tax‑saving products with actual goals (for example, ELSS for long‑term equity, PPF for long‑term safety).

Mid‑Year Review

• Check how much of the planned deductions you have already utilized.
• Adjust contribution amounts if income or circumstances changed.
• Ensure health insurance premiums are planned before renewal dates.

Financial Year End (Jan–Mar)

• Top up remaining tax‑saving allocations to meet the planned limit.
• Review realized capital gains and consider booking selective losses if appropriate for tax‑loss harvesting.
• Collect all premium receipts, interest certificates, and investment proofs.

Section 6: 12‑Month Implementation Timeline

Use this as a practical roadmap. Adjust the months based on when you start.

Months 1–3: Foundation

• Calculate monthly expenses and decide emergency fund target.
• Open emergency fund account and start monthly transfers.
• Estimate life and health insurance needs and close gaps.
• Define key financial goals and risk profile.

Months 4–6: Systems & Investments

• Start SIPs in selected mutual funds mapped to goals.
• Begin or continue contributions to long‑term instruments (for example, PPF, NPS where suitable).
• Check progress on emergency fund (aim ~50% mark by month 6 if possible).
• Do a short mid‑year review of all action items.

Months 7–9: Expansion & Organization

• Increase SIP amounts with any income growth.
• Set up separate tracking for big goals: home, education, retirement.
• Organize documents: policies, investments, loans, key IDs.
• Ensure nominees and contact details are updated across accounts.

Months 10–12: Review & Next‑Year Plan

• Check whether tax‑saving and investment targets are on track.
• Review portfolio performance and rebalance if allocation drifted.
• Estimate tax position and prepare for return filing.
• Set goals and SIP amounts for the next financial year.