Sample Financial plan #1 – the background

In the earlier posts of the blog, I have covered several topics all leading up to the creation of a holistic financial plan. In the next few posts I will give a real-life example on how to construct an actual financial plan. While the names here are fictional, this is actually about someone who I know quite well. I had helped him make a financial plan some time back and he was happy to let me use his example for the blog.

Let us look at the details of the individual, his family, his current life situation and financial aspects. We will be using these in the next few posts to illustrate how a holistic financial plan can be constructed.

  • Ravi (33) and his wife Madhuri (30) live in Hyderabad with their son Ankit (4) and daughter Nayan (1). Ravi works in a software company and Madhuri is a freelance web designer, having given up her job after Nayan was born.
  • The couple have an apartment in Hyderabad which they had purchased 4 years back, with a home loan of 40 lacs. Much of their savings till that point were used to make the down payment for the apartment. The EMI is about 40,000 per month and will run for the next 11 years.
  • The post tax earning of Ravi is about 1.5 lacs per month today and has prospects of increasing by about 10 % every year from here on. Madhuri earns about 30,000 Rs on an average currently and this can increase significantly later on as she is able to put more time into her freelancing.
  • Ravi has about 10 lacs in his PF now and his annual contribution to it is about 2 lacs. He had started a PPF 3 years back and current value of it is about 5.5 lacs. Apart from this he has FD of 2 lacs for contingency funds and some stocks worth about 3 lacs currently.
  • Ravi would ideally like to get out of his corporate role by the time he is 50, or at least achieve financial independence by that time. The couple have got some plans of setting up some boutique business in their native town then.
  • Their current expenses are about 40,000 Rs per month, They estimate it to go up by at least another 20,000 Rs per month once the children go to school.
  • The family is covered by medical insurance from Ravi’s company and they have property and car insurance in place. Ravi has a term insurance of 1 crore and Madhuri has one for 50 lacs.

To start the process of constructing a holistic financial plan for themselves, Ravi and Madhuri must formulate their life goals and have a clear road map of it for the next 20 years or so. The overriding goal here is Financial independence in the next 17 years, but there will be several other life goals in the interim period.

In the next post we will see what these life goals are for Ravi and his family.


5 thoughts on “Sample Financial plan #1 – the background

  1. Hi Raj sir,

    Thanks for creating this blog and guiding young people to understand financial aspects of life.

    Are we going to discuss / consider reoccurring like Car purchase as one might need to change car after 5-7 years ?

    Kind Regards,


  2. If you include one section to the above post by clubbing all the current Assets the family owns and the current/future liabilities in numbers after the description of all the steps, then it would sum up and give the figure of Current Net Worth the family currently has. Also, it will define the formula you mentioned in previous post for “Net worth = Relevant Assets – Relevant liabilities”.
    Also, as we move forward, it would be great if you name the choosen investment vehicles (only mention of MF, Stocks, FD, RD, etc, would surfice and not the name of the individual fund name of the MF, Name of Stocks.)

    I am sure, Vineet question would be answered when you write about Step#3 (Extended Money Equation)


    • Hi Debohyoti,

      The value of the net worth itself is not so important to the financial plan, as long as you understand the assets that you have. As you will see, when we plan for the goals, we will be utilizing the existing financial assets and the real assets to realize part of these goals.

      Yes, I will talk of an investment plan, hold on patiently for a couple of days more 🙂 Keep reading and keep commenting.


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