Financial Planning Fundamentals

At 25, I believed financial planning was something I could “start later.” I was just beginning my career - salary coming in, expenses under control and retirement felt like a lifetime away. But with time, I realized every goal we dream of, whether immediate or far ahead, needs one thing in common: a financial plan That’s when I created an Excel sheet and started building a long-term plan - simple, structured, and goal-oriented. It had milestones written down: owning the home I live in by 35, being mortgage-free by 40, setting aside money for my first child, planning for a car upgrade at the right stage, and aligning savings with tax-efficient instruments. Looking back, that one spreadsheet became a quiet anchor. It didn’t predict life perfectly, but it gave direction when decisions mattered. So to every young professional reading this: Don’t separate your “now” from your “future.” They are connected. Every small decision you take today nudges both in the right direction. Starting early gives you an edge no shortcut can replace. Compounding has time to work its magic, and protection - life and health - comes far more affordably when you’re young. And, trust me, your 40-year-old self will silently thank you for the choices you made at 25.

Your money needs a “why.” Without it, wealth is just numbers on a spreadsheet. With it, wealth becomes a tool for purpose. Viktor Frankl taught that a clear "why" helps us endure any "how." The same is true for money. Research by Morningstar shows that goals-based investing accounts tended to be 15% larger than those without a named purpose. Pairing savings with meaningful goals dramatically improves savings rates, as shown in a 2009 Canadian study. Even something as simple as renaming your account—“Olivia’s College Fund” or “Lake House Dream”—anchors you during volatility, according to research conducted during the Great Financial Crisis. True financial planning isn’t just about roots—the numbers, monthly contributions, and risk management. It’s also about wings—the dreams and values that give your money purpose. When roots and wings work together, wealth becomes a source of freedom, not stress. *Full details on these studies in "The Soul of Wealth: 50 Reflections on Money and Meaning*

💶 The more shares people own for retirement, the less poor they feel. Pension systems shape how secure people feel about their finances!   💡 As survery data show, households in countries with a stronger funded pension pillar are less likely to describe their financial situation as "bad" – even when differences in income levels are taken into account.   Why does this matter? 🔍 Funded pension systems can help generate higher long-term returns and support retirement income. 🔍 Over the past decade, stock market volatility has not led to lasting concerns about retirement income. Many households appear able to look beyond short-term market fluctuations. 🔍 A stronger funded pillar may also ease pressure on public finances, creating more room to support vulnerable households in times of crisis.   💡 Takeaway: A more capital-funded pension system is not only about retirement income. It can also strengthen confidence, resilience and social cohesion.   #Pensions #SocialCohesion #Retirement #CapitalMarkets   Deutsche Bundesbank

Have you ever made quarterly estimated tax payments recommended by your accountant only to find out you have a sizable tax bill (or refund) at the end of the year anyway? Here's why... Estimated payments recommended by your accountant are typically based on avoiding an underpayment penalty and may or may not be anywhere close to what you'll actually owe for the year. Accountants typically base estimated tax payments on a safe harbor calculation which is what determines whether or not you'll be subject to an underpayment penalty. For high earners (adjusted gross income above $150k for a married couple), the safe harbor calculation is 90% of the tax due for the current year, or 110% of the tax you owed last year. In my experience, accountants typically base estimated payments on 110% of the tax you owed last year. And that works fine if your income is increasing by 10% or so every year. But if that's not the case, your estimated payments might be too high or too low compared to what you'll actually owe at tax time. (For our clients, income fluctuates substantially year to year due to fluctuating stock prices on RSUs, exercising NSOs and ISOs, and switching jobs between private and public tech companies where comp packages are quite different.) For our clients, we do a tax projection (actually, we typically do a few as the year unfolds) to estimate what our clients might ACTUALLY owe in taxes based on income, equity compensation, capital gains, tax credits, etc for the current year to get a better sense of what to expect at tax time. This helps clients know what to expect (surprise tax bills are among the worst kinds of surprises), and it helps us support them in planning for the amount they'll owe proactively. If you don't work with a financial planner who provides this service, you can request that your accountant do a tax projection based on expected income and tax events for the current year to get a better sense of what to expect at tax time and minimize the likelihood of a tax surprise.

25 Years of Stock Market Growth - and What It Means for Your Pension Over the last 25 years, the world’s stock markets have experienced everything - bubbles, crashes, pandemics, and AI booms. Yet despite the turbulence, one lesson is clear: time in the market beats timing the market. If you had invested £10,000 in global equities back in 2000, the difference between a 4% and a 10% return would now be life-changing. At 4%, your £10,000 becomes £26,600. At 10%, it grows to over £108,000. That’s the power of compounding - and it’s why so many pension savers are falling short. The Global Story in Numbers A 25-year analysis of global indices shows: India’s Nifty 50 compounded at 10.1% a year, the highest globally. The S&P 500 grew at 6.4% - powered by innovation from Apple, Microsoft, Nvidia and Amazon. The FTSE 100 returned 1.3% - barely ahead of inflation. It’s not about geography; it’s about growth. Markets that embraced innovation, reform, and demographic expansion outperformed those that didn’t. If you held a UK-only pension, your growth over 25 years was modest. If you diversified globally, you captured the world’s progress. The Pension Wake-Up Call Many people don’t know three critical facts about their pensions: 1. Where it’s invested 2. What return they’re getting 3. How much they’re paying in fees If you don’t know those, you can’t know your future. Most pension funds are designed to be “safe”, which often means underperforming. Many earn 4–5% a year, which barely outpaces inflation. Meanwhile, global equity indices show that 7–10% long-term returns are achievable. That’s why I launched Campaign for a Million - to empower one million people to take control of their money, their pensions, and their future. Find free Pension Tools to Help You Take Control at https://lnkd.in/eZTDGdF7 These tools are designed to do what traditional pension statements rarely do - give you clarity, transparency, and control. The Next 25 Years AI, automation, and clean energy will define the next era of wealth creation. Countries and companies that innovate will lead. Investors who stay informed, diversified, and disciplined will compound their wealth quietly - just as they did over the last 25 years. Compounding doesn’t just apply to money - it applies to knowledge. Every bit of financial awareness you build compounds into confidence. The data shows that global markets reward long-term investors. Don’t just save for retirement. Build it - intentionally, intelligently, and independently.

𝗜 𝗯𝘂𝗶𝗹𝘁 𝗮 𝗺𝗶𝗹𝗹𝗶𝗼𝗻-𝗱𝗼𝗹𝗹𝗮𝗿 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 𝗯𝗲𝗳𝗼𝗿𝗲 𝗜 𝘂𝗻𝗱𝗲𝗿𝘀𝘁𝗼𝗼𝗱 𝘁𝗵𝗲 𝗱𝗶𝗳𝗳𝗲𝗿𝗲𝗻𝗰𝗲 𝗯𝗲𝘁𝘄𝗲𝗲𝗻 𝗽𝗿𝗼𝗳𝗶𝘁 𝗮𝗻𝗱 𝗿𝗲𝘃𝗲𝗻𝘂𝗲. I was running EngineerBabu, closing deals, managing teams, and talking to investors. all while fundamentally misunderstanding my own financial health. Let that sink in for a moment. 𝗛𝗲𝗿𝗲'𝘀 𝘁𝗵𝗲 𝘂𝗻𝗰𝗼𝗺𝗳𝗼𝗿𝘁𝗮𝗯𝗹𝗲 𝘁𝗿𝘂𝘁𝗵 𝗮𝗯𝗼𝘂𝘁 𝘄𝗼𝗺𝗲𝗻 𝗲𝗻𝘁𝗿𝗲𝗽𝗿𝗲𝗻𝗲𝘂𝗿𝘀:  • Most of us weren't raised to understand money.  • We weren't taught to negotiate salaries.  • We weren't encouraged to study finance. So we learn the hard way. By nearly failing. By making expensive mistakes. I'm done with that model. Here are the finance basics every woman entrepreneur needs to understand: 𝟭. 𝗥𝗲𝘃𝗲𝗻𝘂𝗲 = 𝗣𝗿𝗼𝗳𝗶𝘁 Revenue is the money coming in. Profit is what's left after you pay for everything. Track both. Obsessively. 𝟮. 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗶𝘀 𝗞𝗶𝗻𝗴  You can be profitable on paper and still go bankrupt. How? If your money is tied up in unpaid invoices while your bills are due. Cash flow = the actual money moving in and out of your business. 𝟯. 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱 𝗬𝗼𝘂𝗿 𝗨𝗻𝗶𝘁 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰𝘀 How much does it cost you to acquire one customer vs the revenue generated. If acquisition cost > revenue per customer, you're in trouble, no matter how fast you're growing. 𝟰. 𝗞𝗻𝗼𝘄 𝗬𝗼𝘂𝗿 𝗕𝘂𝗿𝗻 𝗥𝗮𝘁𝗲 𝗮𝗻𝗱 𝗥𝘂𝗻𝘄𝗮𝘆 Burn rate = how much money you're losing per month. Runway = how many months until you run out of money. If you have ₹20 lakhs in the bank and you're burning ₹2 lakhs/month, your runway is 10 months. 𝟱. 𝗚𝗿𝗼𝘀𝘀 𝗠𝗮𝗿𝗴𝗶𝗻 𝘃𝘀. 𝗡𝗲𝘁 𝗠𝗮𝗿𝗴𝗶𝗻  Gross margin = revenue minus direct costs (like salaries for delivery team). Net margin = revenue minus ALL costs (including rent, software, marketing, etc). Gross margin tells you if your core business model works. Net margin tells you if your entire operation is sustainable. 𝟲. 𝗘𝗺𝗲𝗿𝗴𝗲𝗻𝗰𝘆 𝗙𝘂𝗻𝗱 𝗶𝘀 𝗡𝗼𝗻-𝗡𝗲𝗴𝗼𝘁𝗶𝗮𝗯𝗹𝗲 Always have 6-12 months of operating expenses saved. 𝟳. 𝗦𝗲𝗽𝗮𝗿𝗮𝘁𝗲 𝗣𝗲𝗿𝘀𝗼𝗻𝗮𝗹 𝗮𝗻𝗱 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗙𝗶𝗻𝗮𝗻𝗰𝗲𝘀 𝗜𝗠𝗠𝗘𝗗𝗜𝗔𝗧𝗘𝗟𝗬 𝟴. 𝗟𝗲𝗮𝗿𝗻 𝘁𝗼 𝗥𝗲𝗮𝗱 𝗬𝗼𝘂𝗿 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁𝘀 You don't need to be an accountant. But you need to understand:  • P&L (Profit & Loss): Are you making or losing money?  • Balance Sheet: What do you own vs. what do you owe?  • Cash Flow Statement: Where is money actually moving? Stop outsourcing all financial understanding to your accountant or co-founder. Your company's financial health is YOUR responsibility. Not theirs. Yours. Learn. Ask. Study. Master this. #WomenEntrepreneurs #FinancialLiteracy #FounderJourney #WomenInBusiness #Entrepreneurship #Supersourcing #BusinessFinance

“We had no idea this is what a financial planner did. We thought they just helped on investments. If we did, we would have started working with you a lot earlier” This a common thing we hear and a huge reason why I create content and show what we do So to make it even more tangible for you, I am going to walk you through what are we doing for our clients in our fall reviews Here’s exactly what we go through for every client: Tax Planning We get every clients' most up to date paystubs, P&L, and any other documents to understand where they are at for the year. We then help map out taxes and what tax planning moves need to be made. This could be paying more or less in salary to maximize QBI. This could be increasing contributions to their 401k, HSA, etc to get it maxed out, etc. (as well as use 529 plan in this calendar year for the people it fits for) Then we go through investment accounts and look for tax loss harvesting opportunities, donor advise fund moves, etc. We also look and see if implementing Roth conversions and optimizing tax brackets makes sense before year end. Company benefits We review every clients’ company benefits guide and help them maximize these benefits. This means we analyze both spouses health insurance options and help them select the best plan or mix of plans for them. We then help them decide on if they should use their HSA, FSA, etc. and how much to put it in it. Other areas we look at within company benefits: disability insurance, life insurance (only rarely use), Dependent Care FSA, legal benefits, dental, vision, etc. Note: this is for employees. Business owners we evaluate private insurance, ACA plans, etc for them plus all the other insurances above. Insurance Planning We get every clients homeowners/renters, auto, and umbrella declaration pages to make sure they are properly covered. Then we help them go make the changes needed to be properly protected. We also look at external life insurance and disability insurance make sure they have the proper amount for their life and their family. Estate Planning Sometimes things change: relationships change, you want new appointed guardians, maybe you move, you had more kids, you may need to add a trust, etc. and that leads to needing an update of your plan. For clients who have not gotten it done, we either refer them to an attorney and help setup the meeting or we get them into Wealth.com to go get their plan done. They also can hire an attorney through Wealth. Staying on top of this is crucial Life changes Lastly, our team reaches out a few weeks ahead of time to make sure we get their agenda. We don’t want to just throw our agenda on everyone and avoid what they are going through. It is crucial to focus on what our clients really need and want help on while also getting the yearly important review parts done. This is what a great fall review looks like for our clients. We have found this adds a ton of value for them and their lives.

You can save thousands in tax... by paying more tax. Sounds backwards, right? But this move saved one of my clients £8,547, without earning a penny more. Here’s what happened: He usually takes £30k a year from his business. But this year, he needed an extra £40k for a house deposit. His plan was to take the full £70k now and get it over with. The problem? That would push him into the higher-rate tax band, triggering a much bigger tax bill. So we took a smarter route: 👉 We split the extra £40k evenly over two tax years — £20k this year, £20k next. That small shift meant: ✅ He stayed in the basic rate tax band ✅ Avoided the higher 40% tax rate ✅ And saved £8,547 in tax overall He technically paid more tax this year, but saved thousands in the long run. That’s the difference between reactive and proactive tax planning. Tax isn’t just about what you pay. It’s about when and how you pay it. If you're thinking about a big withdrawal for a house, car, or anything else, speak to someone first. A bit of planning can save you a lot of money.

One FOI request. Two seemingly different stories. One common lesson. I recently obtained data from the Department for Work and Pensions on workplace pension opt-out rates by age. The results were concerning. 📈 Among 22–29-year-olds, opt-out rates have climbed from 6.5% to 9.3% since 2019. 📈 Meanwhile, workers in their 60s continue to have the highest opt-out rates of any age group, often exceeding 15%. The reasons are probably very different. Many younger workers are likely to be feeling the squeeze from student loan repayments, high rents and the cost of living. For older workers, it may be a feeling that they've already saved enough, or that they're better off taking the money now. But both groups risk making the same mistake: focusing on the short-term gain while underestimating the long-term cost. Opting out doesn't just mean losing your own pension contributions. It also means giving up employer contributions, tax relief and years of compound growth that are incredibly difficult to make up later. Even in your 60s, that growth can make a big difference. The findings on young people were covered brilliant by Megan Harwood-Baynes for The Times: https://lnkd.in/ek6BBCuG While I explored for Fidelity International why opting out in your 60s can be just as costly as retirement approaches: https://lnkd.in/eTAhMw7J Different stages of life. Different pressures. But the same reminder: decisions that feel sensible today can have consequences that last for decades. #pensions #retirement #money #personalfinance

I love January for a weird reason: I can finally dive into my full-year financial summaries from the previous year and set my 2025 goals. I make a date out of it, analyzing my spending and saving habits and projecting future contributions to my 401(k) and Roth IRA. My “New Year Financial Dates” have changed significantly since I started doing them (almost six years ago today, when I joined Bankrate :) ). Earlier in my career, my goal was liquidity (adding cash to my emergency fund that I could access at any time). But my rainy day fund is now more established, so lately, I'm more focused on scaling up my retirement contributions. Here are some key lessons I’ve learned over the years: 1. 50/30/20 rule: Calculate how close you are to this budget rule, but remember, it’s just a guideline. These budgeting guardrails might not be so realistic anymore, in an economy dogged by barriers like student loan debt or high housing costs. Case in point: 50% of the 42.5 million renter households in the United States spent more than 30% of their income on housing costs in 2023. 2. Building your emergency fund: Financial experts typically advise Americans to keep six to nine months' worth of their monthly expenses in a savings account, but many of us are probably spending money on things that we wouldn't be paying for if we were unemployed. Our “emergency number” is also fluid, changing every year along with our expenses. That’s why I like to revisit what I call my "survival" number. Track your monthly expenses and figure out what you'd cut if your financial situation changed suddenly. 3. Small savings goals: If you don’t yet have your "survival" number in your savings, don’t worry: Set small, achievable goals. Savings add up, especially when paired with a high-yield savings account (which are currently offering 4% or more annually). 4. Debt management: Know what’s good versus bad debt. Never go bigger on your student loan repayments if it means sacrificing saving for retirement or emergencies. But credit card debt is something you want to chip away at immediately, possibly by utilizing a balance-transfer card. 5. For more advanced budgeters: If you feel comfortable with your savings and instead want to prioritize scaling up your retirement contributions, play around with how much your monthly income would change if you increased your contributions by just 1-2%. Thanks to the tax savings, you might actually notice it less than you think. Bottom line: Set small goals, give yourself grace and remember that consistently paying yourself first will pay off. Let me know your financial goals this year!