Factors affecting financial planning in India

Financial planning is not so popular in India – a small percent of Indians are doing it. Though the numbers are improving, there is a lot that has to be done in this area. Our request to readers is that if you have not started financial planning, please don’t delay it. To live life king-size and have a happy and prosperous retirement, the first step is financial planning.

Before you do financial planning, it is essential to understand the factors that will affect your financial planning. On paper, the plan looks good, but over time, things change, and so can your financial plans. 

Today, we will discuss the top 3 factors that may affect your financial planning and hence need to be given due importance.

Factors affecting financial planning

Factor 1 – Your lifestyle
Your lifestyle changes with time. Today, you may be comfortable driving a budget car, but in the coming years, you may want to shift to the luxury segment. There is nothing wrong with it. The only thing is that you need to accommodate such possibilities in your financial plan. If the change in your
lifestyle is more than what you had assumed, you may not achieve your financial goals.

How much you will earn in the future is a bit uncertain. The amount of return your investment will give you is also uncertain. The only thing certain in your financial journey is how much you spend.
Your spending pattern and behavior are crucial factors that can make or break your financial plan. The secret to the success of your financial planning is your ability to control your spending.

You must learn to budget if you have not done it so far. You can find spreadsheets and applications online to help you do your budgeting. Not part of financial planning directly, but essential if you
want to achieve your goals.

Factor 2 – Personal
Some obvious personal factors will affect your financial planning. You must know such factors and, accordingly, make changes to your financial plan. Below are some factors to watch out for:

Dependents: How many dependents do you have? If your parents and spouse are dependents, your financial equation will change. Once you have children, you need to look at your financial plans.

Your financial goals: Your financial plan is affected by the total number of financial goals you have. If you have too many financial goals but not the budget to fulfill all, you need to prioritize them.

Age: Your age is also an essential factor that determines how much risk you can take. Your age decides the time left to manage the gap between where you want to be financially and where you are financially.

Personality traits: How you are a person when it comes to investment and planning is also essential. For example, patience is a virtue every investor must develop – it takes time to fulfill financial goals. Also, you must learn to switch off the market noise, as market noise can
create an emotional imbalance. It is not good for investors.

Another factor that is not personal but affects your financial planning is the unique customs in your family. It may demand more money than you had initially planned. For example, you planned your child’s birth (financial perspective) but may have ignored functions specific to your family in your
financial plan. It can make a difference. Do consider all these factors while doing the financial plan.

Factor 3 – Socio-Economic Factors
You can call them uncertain factors also. You cannot do anything about them, but you must plan for them.

Below are some such factors:

Policies and taxes: Economic policies are an influencing factor in your financial planning to a large extent. For example, the Long-Term Capital Gain (LTCG) on equity investment is currently 10%. However, if it changes to 20% in the future, it will impact your long-term goals.

Market forces: Market forces like fluctuations in consumer prices, interest rates, spending rates, inflation, and deflation will also affect your savings and investments.

Political stability: The stability or instability of the political situation in India will surely impact the performance of your investments.

Global scenario: The global political and economic factors will also influence the market. For example, the Russia-Ukraine war has impacted the global economy and the Indian economy immensely.

Most of these factors are far from the forecast of a layman or even an expert. Can you do anything related to such factors in your financial plan? No. You can understand and handle these situations wisely by actively managing your financial plan. You must also make investments that have the potential to give you higher returns with minimum risk.

The Way Forward
Equity investment is an essential part of every financial plan. If you plan your equity investments wisely, you can achieve most of your financial goals on time (or before).

In India, most investors don’t know how to make the most of the equity market. Hence, they don’t invest in it. We have created a platform that allows every investor to invest in the equity market.

You can use our AI-driven platform – Jarvis Invest, and take the first step towards fulfilling your financial goals. Jarvis tells you which stocks to invest in based on your risk profile and investment horizon. It also has a risk management system that reduces your portfolio risk. 


You can download the app and get started with your investments.