If you are trying to save for a new house, build a corpus for retirement, or want to hone your skills as an investor, financial planning is the way to get there. In that case then, there are certain basics that everyone should know about managing finances. 

• Make a detailed list of your goals: 

Be it a new car, a house, saving for retirement or your children’s education, you should list out your financial goals in order to know exactly what you are planning for. When you have clearly identified your goals, you can develop a plan to achieve them more effectively. Since devising a strategy to move from your current position towards your goal is a complex activity, consulting a certified financial planner or wealth management firm can help you reduce the burden of this process.

• Save before you spend: 

Through all stages of your life, saving is an activity that should be given priority. At the early stages of your career when you are drawing a steady paycheck, you should try to save at least 10% of your salary every month. Starting to save early can see your corpus grow vastly over time, because of the power of compounding. No matter what you are saving for, it is always a good decision to keep your savings in a separate account. This will ensure that you do not spend the money prematurely. 

• Maintain an emergency fund:

Apart from your savings, it is important to keep aside an amount that is primarily composed of liquid funds, for any emergency that may arise. An emergency can come up at any time and usually requires immediate action. So be it a medical emergency, or a last minute payment, having an emergency fund will make that your cash flow is not deterred in the event of any contingency. 

• Procure general insurance: 

Every financial plan should include a step to identify and purchase the right amount of insurance you need to secure yourself, your family and your assets. In this sense, you must have at least minimum coverage which includes basic health, home and vehicle insurance. Subsequently, meeting your financial advisor can help you estimate the exact quanta of insurance you require beyond the basic coverage. 

• Life insurance is absolutely necessary: 

Life insurance secures your family in the event of your untimely demise. It becomes even more important to buy a life insurance policy if you are the sole breadwinner. While you can choose between a whole life or term plan, the general rule for life insurance is that the payout should be 10-12 times your annual income. 

• Diversify your investments: 

Diversifying your investments is a good way to mitigate risk. In this sense, don’t just stick to equity. It is good to invest in an array of assets that also includes bonds, mutual funds, annuities, property, and so on. Investing in gold is also a good way to diversify your portfolio – particularly for periods when the value of bonds, stocks and other similar assets begin to decline. Getting in touch with  a financial planner can help you draw out a versatile investment plan that caters to your needs. 

• Review your net worth over time: 

Your net worth is the sum total of all the assets you own minus any outstanding liabilities you may have. Calculating your net worth at different instances is a good way to analyse your financial progress over time. This process also helps you record and organise your finances efficiently. 

Keeping in mind that the way your finances are organised is unique to you, these financial rules of thumb that can help you maintain a strong foundation no matter the complexity or desired outcome of your plan.