Financial Planning For Beginners: A Step-by-Step Guide
July 05, 2025

Whether you're a fresh graduate starting a new job or someone looking to reorganise their savings and investments, understanding the basics of beginner financial planning is crucial. Today, we'll explore practical strategies and tools that can help anyone begin their journey towards effective financial management.
We'll discuss setting realistic goals, understanding your income and expenses, the importance of an emergency fund, investment basics, and finally, ensuring you have proper insurance coverage. Each section will provide actionable advice tailored to help you craft a plan that suits your unique financial situation.
What must a good financial planning start include?
Assess Your Current Financial Situation
A good financial planning start can begin with calculating your net worth (assets - liabilities) to understand your overall financial health. Analyse your cash flow by tracking income and expenses to identify savings potential. Evaluate your current savings, investments, debts, and insurance coverage.
Set Clear Financial Goals
Identify short-term (1-3 years) and long-term (5+ years) goals using the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-bound). Consider goals like buying a home, funding education, retirement planning, etc.
Prepare a sound budget
Allocate income to needs (50%), wants (30%), and savings/debt repayment (20%) using the 50/30/20 rule. A good financial planning start, must also track expenses regularly to ensure you stay within your budget.
Build an Emergency Fund
Also, aim to save 3-6 months' worth of living expenses in a liquid account for unexpected costs. This prevents reliance on credit during emergencies.
Pay Down High-Interest Debts
Focus on clearing debts with the highest interest rates first using strategies like avalanche or snowball method. Avoid new debt for depreciating assets and use credit cards responsibly.
Invest for the Long Term
Determine your risk tolerance and invest in a mix of assets like stocks, bonds, mutual funds, etc. Maximise tax-advantaged retirement accounts like EPF, NPS, PPF, etc.
Get Adequate Insurance Coverage
Protect your family with term life insurance and yourself with health/accident insurance
Consider other insurance like home, auto, travel, etc. based on your needs.Plan for Estate and Taxes
Prepare a will and nominate beneficiaries for your assets and investments. Also, Optimise your tax liability by claiming deductions and exemptions under the Income Tax Act.
Seek Professional Guidance
Consult a Certified Financial Planner (CFP) for financial future planning strategies. They can help you navigate complex financial decisions and achieve your goals.
By following these steps and reviewing your plan periodically, you can take control of your finances and financial future planning is made easy.
Final Thoughts
Today’s discussion has set foundational knowledge on how to make a good financial planning start. Each step plays its crucial role in building up overall financial health capable of standing tests.
If you're just starting out in your savings journey, opening a Savings Account with Ujjivan Small Finance Bank can be a good start. We have a wide variety of Savings Accounts catering to different financial needs - sign up for the one that meets your financial goals. Alternatively, you can browse through Ujjivan SFB product suite - our wide range of financial products are designed to make your financial life better.
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FAQs
1. What constitutes good beginner financial planning?
A good beginner financial planning would include measures like evaluating your networth, getting adequate insurance cover, paying back high interest debts, setting a clear financial goal, preparing a budget, seeking professional help etc.
2. Why is having an emergency fund crucial?
An emergency fund acts as buffer against sudden unexpected events, without having to resort to drastic measures such as high interests loans.
3. Should beginner financial planning include investment planning?
Yes. Beginners can seek professional advise on investment strategies, in case they lack the expertise.
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