World Financial Planning Day: Pre-Investment Checklist

Establish a Household Budget

Before you start investing, create a detailed household budget. List all sources of income and monthly expenses. Follow the 50-20-30 rule: 50% for living expenses, 20% for savings, and 30% for discretionary spending.

Eliminate Debt

Prioritize paying off high-interest unconstructive debt like credit card balances and personal loans. Ensure your home loan EMI doesn't exceed 40% of your take-home pay. Clearing debt frees up resources for investing.

Secure Adequate Insurance

Ensure you have sufficient insurance coverage. Consider health insurance to cover medical expenses and term life insurance to protect your loved ones. Aim for life insurance coverage of at least seven times your annual income.

Build an Emergency Fund

Establish an emergency fund with 3-6 months' worth of household expenses. Keep it in easily accessible, liquid assets to handle unexpected events without resorting to borrowing.

Identify your financial goals, such as buying a home, funding education, or retiring comfortably. Create separate plans for each goal, considering your risk tolerance and time horizon. Choose the right investment vehicles to align with your objectives.

Set Clear Financial Goals


In conclusion, investing is crucial, but effective financial planning is the foundation. By following these five tasks, you'll be better prepared to achieve your financial aspirations and minimize risks. Align your investments with your goals for financial success.