Financial planning

Financial Management       

Financial planning is the process of defining our financial goals, such as knowing when we will need to use our money, what for it will be used and then laying out a plan of action with specific steps we need to take to achieve those goals.

A financial planner is a professional who helps us to organize our finances, projects the results of our savings and investments so that we can see how well we are prepared for retirement.

A financial planner helps us make decisions with our money that will help to reach our financial goals as efficiently as possible. An experienced financial planner can usually help to improve the quality of the financial decisions we make.

They  gather our personal and financial data and use this data to create projections that show when and how we can accomplish our goals. These projections are based on a set of realistic assumptions about inflation, investment returns, how much can be saved, and how much can be earned and can be spent.

Financial planners can also help client remain disciplined about their financial strategies. They should be promising good advice across a range of issues, not just investments.

A good financial planner genuinely cares about being able to give you the best advice possible.

A good financial planner makes the recommendations that we need based on our specific goals and situation, without regard for any other factors.

Financial planners advise clients on how best to save, invest, and grow their money without making loss.

Aiyan Thiruvalluvar says 

வாரி பெருக்கி வளம்படுத்து உற்றவை

ஆராய்வான் செய்க வினை. (512)

आय-वृद्धि-साधन बढ़ा, धन-वर्द्धक कर कार्य ।
विघ्न परख जो टालता, वही करे नृप-कार्य ॥ (५१२)

Explanation by Scholars 

Let him do the work who can enlarge the sources (of revenue), increase wealth and considerately prevent the losses.

வருமானம் வரக்கூடிய வழிகளை விரிவாக்கி, வளங்களையும் பெருக்கி,  இடையூறுகளையும் ஆராய்ந்து நீக்கிட வல்லவனே செயலாற்றும் திறனுடையவன்.

Fiscal Planning

Financial Management 

The definition of fiscal is something related to Financial Management. An example of fiscal is a family budget, a fiscal plan.

Fiscal revenue is the money generated like Company Income and for Govt, it is in the form of tax collection. A fiscal deficit occurs when the total expenditures exceed the revenue that it generates.

A balanced budget refers to a budget in which revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists.

Aiyan Thiruvalluvar explained about Fiscal Planning and balanced budget, 2000 years ago.

ஆகாறு அளவிட்டி தாயினுங் கேடில்லை
போகாறு அகலாக் கடை (478)

तंग रहा तो कुछ नहीं, धन आने का मार्ग ।

यदि विस्तृत भी ना रहा, धन जाने का मार्ग ॥ (४७८)

Explanation by Scholars

Income may be scant; but yet, no failure there, if in expenditure you rightly learn to spare.

வருமானம் அளவில் சிறிது என்றாலும் செலவினம் பெரிதாகாத போது கேடு இல்லை.

ஆகுஆறு = Income

அளவு இட்டிது ஆயினும் = barely sufficient

கேடில்லை= No failure

போகுஆறு =  expenditure

அகலாக் கடை = till not more than (the income)

Personal Budget

Financial Management

It’s key to check in with our personal budget on a weekly basis so that we can adjust our spending throughout the month. A personal or household budget is an itemized summary of expected income and expenses for a defined period of time, most frequently one month.

A budget will show us how much money we expect to bring in against all of our expenditures from the required expenses like house payments, rent and discretionary spending like entertainment.

Ultimately, the end result of the personal budget will show where the money is coming from, how much is there, and where it is all going each month.

Steps for effective personal budget:

• Record all of the sources of income.
• Create a list of monthly expenses. 
• Break expenses into fixed and variable.
• Total your monthly income and monthly expenses.
• Make adjustments to expenses.

It is important to review the budget on a regular basis to make sure to stay on track. With a personal budget, a person can begin to prioritize his spending and better manage his money and financial future. Otherwise, we risk overspending and racking up credit card debt, which can be a dangerous thing for our personal finances.

Aiyan Thiruvalluvar says

அளவறிந்து வாழாதான் வாழ்க்கை உளபோல

இல்லாகித் தோன்றாக் கெடும்.  (479)

निज धन की सीमा समझ, यदि न किया निर्वाह ।
जीवन समृद्ध भासता, हो जायगा तबाह ॥ (४७९)

Explanation by Scholars:

The prosperity of him who lives without knowing the measure (of his property), will perish, even while it seems to continue.

பொருளின் அளவு அறிந்து வாழாதவனுடைய வாழ்க்கை, பல வளமும் 
இருப்பது போல் தோன்றி, இல்லாமல் மறைந்து கெட்டு விடும்.

Self-funding

Financial Management

A popular mantra for success in personal and business finance is “Live within your means.”  Funding a business from own source, often referred to as bootstrapping. ie., pulling yourself up by your bootstraps. Bootstrapping a business often means money is tight, particularly in the early stages. With careful planning and making creative use of the resources, the bootstrapping can be a great way to fund a business.

Once the business is up and running, it should start generating profits and cash that can be plowed back into the business. If the company is doing well, this money will be enough to fund any investments in future. This strategy is very effective, low-risk and low-cost.

  Advantages of self funding:

• 100% Ownership
• Full Control on the business
• More Discipline
• Can know exactly how much money is available.
• Can move forward quickly with what matters most on running the business.

Funding from external sources can be risky. If money is raised through debt, the repayments and interest will eat the earnings. External funding can lead to inflated spending at any time, leaving the business vulnerable if funding dries up later on.

Self-funding makes it easier to keep the business operating at a sustainable level, avoiding excessive spending and relying on its own resources rather than the support of outsiders.

Aiyan Thiruvalluvar says

குன்றேறி யானைப்போர் கண்டற்றால் தன்கைத்தொன்று

உண்டாகச் செய்வான் வினை   (758)

निज धन रखते हाथ में, करना कोई कार्य ।
गिरि पर चढ़ गज-समर का, ईक्षण सदृश विचार्य ॥ (७५८)

Explanation by Scholars:

An undertaking of one who has wealth in one's hands is like viewing an elephant fight from a hill-top.

தன் கைப்பொருளைக் கொண்டு ஒரு தொழில் செய்வது என்பது யானைகள் ஒன்றோடொன்று போரிடும்போது இடையில்சிக்கிக்கொள்ளாமல் அந்தப்போரை  ஒரு  குன்றின் மீது நின்று காண்பதைப்போன்று இலகுவானது.