6 Smart Ways of Financial Planning which can help you in early retirement

1) Start Early : Financial Planning at an early stage will give you the benefit of accumulating the wealth owing to the power of compounding effect. 

2) Understand your Financials : Most of us generally do not know how much we spend and save. For this, it is important to have in depth study of your 3 months (minimum) expenses. This will help you to understand where all you can cut-down your expenses and increase your savings.

3) Know your income : Generally, we think that the amount which is credited to our account as a salary is our income however, it is not so. There are many other components in our salary which can help us to increase our income. Further, if you are earning any interest or dividend then that will also help you in building your savings.

4) Have a clear goal : A clear understanding of your goals will help you to make a proper strategy and action plans.

5) Bifurcation of Goals : Divide your short and long term goals clearly.This will help you to understand that how much investment you have to put in and what is your risk appetite.

6) Know Your Financial Instruments : Before investing in an financial instruments it is important to have a proper knowledge about that. Understand the financial instruments from various angles like returns, inflation, tax saving, risk etc. Afterall, it’s your hard earned money so prior knowledge is very important.