Financial health refers to ‘where we stand today’ with respect to our finances and what we need to do in the coming years to handle future expenses and financial goals.

In this post, I would like to describe a simple exercise to assess our personal financial health. This process can be automated with the integrated financial planning template.

The process in which expenses, investment amount needed for financial goals, along with expected salary are projected into the future was a pivotal exercise in my financial learning curve.

The idea is to create a table with the following entries:

• We take our current salary and project it in future with some reasonable growth rate.
• Do the same with current expenses with an assumed inflation rate
• Determine the total investment amount required for all out goals and if possible increase it at some rate for the coming years.
• Determine the amount that we can invest each month – now and in future (increased or decreased at some rate).
• Consider any current and future liabilities.

We might end up with something like this. This is a screenshot from the above-mentioned financial planning template.

The red cells are those years when we will be investing less than required for our goals. If there are too many red cells, then goal priorities and inputs may have to be altered.

This exercise can be a confidence booster for a few and scary for many – including me.

1. This is only a projection with assumed inputs. The future can turn out better (or ..) than this.
2. If we keep out head down and invest systematically with a solid strategy in place, with a bit of luck, and in time, the number of red cells may come down.
3. I did not lose sight of this hope when I first did this exercise 6 years ago, and I would urge you to do the same.
4. Like any other goal-planning exercise, it is important to do this assessment once a year.
5. In some cases, the red cells (inability to invest enough) can be reduced with small changes in lifestyle.

After I did this exercise, I had a clear idea of where I stand and what I can hope for in future. To be frank, I was disappointed that a couple of my wants could not be accommodated after accounting for my needs. Well, we can’t have everything, can we?

Use the freefincal robo advisory template

or

Download the Integrated Financial Planning Template

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You Can Be Rich Too with Goal-Based Investing

My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create customg solutions for your lifestye! Get it now . It is also available in Kindle format .

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Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a youngearner

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The ultimate guide to travel by Pranav Surya

This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)

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Create a "from start to finish" financial plan with this free robo advisory software template

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All calculators from our book, “You can be Rich Too" are now available on Google Play!

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Install Financial Freedom App! (Google Play Store)

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Install Freefincal Retirement Planner App! (Google Play Store)

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Find out if you have enough to say "FU" to your employer (Google Play Store)

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