Sample Personal Financial Plan

One of the most important thing to track in our life is our personal financial status. We do not give much importance to it (like running a business), because we are not accountable to any one for our personal financial goals and results.

Financial Plan helps you assess where you are now financially and will help you to reach your financial goals in the near future. This excel financial plan template allows you to plan and analyze the following

  • Cash Flow Analysis – lists your income and expenses and calculate net cash flow(Subtract your expenses from your income). If it’s positive, plan how to invest in various financial instruments with the excess. If it’s negative, either find ways to increase your income or cut your expenses
  • Percentage Allocation of excess money in various investment instruments
  • Asset/Debt Ratio – lists your asset and debt and calculate net worth
  • Pension Requirement – capital erosion calculation and pension requirement

Excel template contains four sheets.

First sheet contains percentage of increase for every asset type such as stocks, FD, Pension, House, Plot(Land) etc.
Second sheet captures income, expense and savings in various financial investment instruments
Third sheet captures total asset, debt and net worth.
Fourth sheet captures retirement planning.

Personal Financial Plan (Right click and save as)

Note: Do not modify values under colored cells(red) as they are computed automatically.
Unit is in Thousands

Sample Strategy for planning
1.Insurance perspective: (ordered with priority)

  • If you do not have 25 lakhs(based on your lifestyle) net-worth today,buy term insurance for 25 lakhs
  • Buy 1 house and rent it out(occupy this house if need arises)
  • Buy at-least 1 acre land to produce food organically

2.Growth Perspective:

  • Choose financial instrument such as stock/PPF/MF where is no long term capital gain tax (>1 year) during employment if your tax bracket is 30%
  • Set networth target for next 10 or 15 years and distribute savings in appropriate investment instrument to achive the target.

3.Retirement Perspective:

  • Plan to retire by 50. Divert 50 lakhs to debt based financial instrument(no equity exposure to ensure safety of money) and Invest additional 2 lakh for next 10 years such that it triples with 9% cumulative growth rate.
  • PF+PPF+Pension+Bank Balance at the age of 50 should be close to 50 lakhs such that immovable and equity based assets are not disturbed to draw pension
  • Buy safe pension annuity with this amount (~1.5 crores) with mix of Post office monthly income plan, senior citizen saving scheme,New pension annuity scheme etc till tax ceiling limit is reached
  • Make sure that pension withdrawn does not erode the capital and will adjust inflation . Expense such as rent/food will be reduced during this phase.Only major expense head will be medical which should be covered by medical insurance plan.

4.Additional Income:

  • Additional income is generated with stock dividend which are not taxable
  • Additional income can also be generated, with 12 dividend based mutual fund maturing each month. Note that these are not taxable.
  • Investment in land can be utilized for agri/business to produce additional income. Note agricultural income is not taxable. Any business pays taxes after its expense unlike employees where TDS is deducted before expense.

If you find any items missing under income, expense  or  savings head. Please comment.

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