Determine your net worth by adding up all your assets and deducting all your liabilities.

You will then be able to clearly understand your financial situation. Write down the value of every appreciating asset you own. Now do the same thing with your debt, then subtract the total debt from the total assets. The next step is to know your spending and saving habits, and then, accordingly, you can prepare a budget.

Make a list of your income and expenses and then divide it into categories like necessity, entertainment, debt payments, and emergency fund because creating a 50/30/20 rule can be very helpful while creating a budget. 50% of your income should be spent on your essentials like rent, utilities, transportation, groceries, etc.; 30% should be spent on things that are not essential like dining out, entertainment, self-care, and travel; and 20% should be spent on savings, paying off debts, retirement planning, and an emergency fund. It's good to be prepared for unforeseen contingencies. Your future self will thank you.

A life insurance policy pays money to the dependants. If the main earner dies, the nominee will get the money. Your insurance coverage should be enough to leave your family and dependents with enough money so that they don’t go through financial hardships in your absence. Now the second most important question is: If we want to buy life insurance, which one should we buy? Sit down with your financial planner and decide what coverage you need. Don’t buy life insurance just because it's cheap; you should always do your due diligence before buying life insurance.

 If you have a proper emergency fund, you can prepare yourself for any unforeseen expenses. Emergencies can come in any form that you have not anticipated. There could be a medical emergency too. To cater to these unanticipated emergencies, it is important for you to build an emergency fund. Strategic allocation to equity in the early years of investing can ensure good returns. Equities tend to be volatile in the short term but have given superior inflation-adjusted returns over the long term.

 Retirement planning is all about building a huge corpus by the time you retire and creating a big cash flow out of it. If you are able to grow your money by beating inflation, on retirement, the corpus should continue to grow and compound in value so that it fights inflation while the investor withdraws money. Get a retirement plan drawn up by your financial advisor. They will help you estimate the required retirement corpus and guide you to get there. Under no circumstances should you touch the retirement corpus. Withdrawing money midway to fulfil some other goal will affect the returns in the long run.

 Don’t forget to enjoy life and live in the present. Many people are so worried about the future that they do not enjoy their lives today. It's very important to live in the present. Yes, it’s very important to plan for tomorrow, but thinking too much about the future will spoil your present life.