Basics of Financial Planning

Financial planning sounds like something only adults do, but in reality, it’s something we all do in small ways already. Anytime you decide whether to spend, save, or set money aside for later,  you’re planning out your financials.

At its core, financial planning is about deciding what you want your money to do for you, both now and in the future.

To understand it better, it helps to break it down into a few simple parts.

Income

Income is the money that comes in. For adults, this might be a salary or business income. For students, it could be an allowance, gift money, or earnings from a part-time job.

Example: If you receive ₹2,000 as monthly allowance, that is your income.

Expenses

Expenses are where your money goes. These include everyday spending like food, transport, subscriptions, or going out with friends.

Example: If you spend ₹500 on snacks, ₹300 on travel, and ₹200 on entertainment, those are your expenses.

Saving

Saving means setting aside a portion of your money instead of spending it all. This money is usually kept somewhere safe and easy to access, like a bank account.

Example: Saving ₹400 each month so you have money available for future needs or emergencies.

Investing

Investing is about putting your money into places where it can grow over time. Unlike savings, investing involves some uncertainty, but it also offers the chance for higher growth.

Example: Investing part of your money in mutual funds so it can grow over several years.

Protection

Protection is about preparing for things you don’t expect. This includes having an emergency fund or insurance so that one unexpected event doesn’t disrupt everything else.

Example: Having savings set aside in case your phone breaks or you face a sudden expense.

Financial planning is about using whatever money you have wisely. When you understand how income, expenses, saving, investing, and protection work together, money stops feeling confusing and starts feeling manageable.