Master the Six Pillars of Financial Planning: Your Ultimate Guide

Introduction: Why the Six Pillars Matter

Over my 37+ years as a CFP in India, I’ve witnessed a powerful transformation in people’s lives. It’s not about the amount of money you earn, but how you manage it. The key is a comprehensive financial plan that brings order to your financial life, empowering you to take control.

The Six Pillars of Financial Planning are not just theoretical concepts. They are practical, actionable steps that have transformed the lives of countless families across India. They’ve helped couples in Gurugram retire early, entrepreneurs in Bengaluru build financial resilience, and young professionals in Mumbai gain a sense of control over their finances.

In this article, I’ll guide you through each pillar, share real-life Indian stories, and provide you with actionable steps to align your finances with your life goals.

Pillar 1: Personal Financial Management

This is the foundation. Without a disciplined approach to budgeting, cash flow, and debt, the rest collapses.

• Budgeting & Cash Flow: Create a monthly ritual. Use apps like Walnut or YNAB to see where your rupees go. A couple in Pune that I coached turned a ₹15,000 monthly deficit into a ₹20,000 surplus in just six months by tracking their expenses.


• Debt Management: Prioritise high-interest loans. Remember, personal loans and credit card debt in India can cost you 24–36% annually.
  Financial Health Check: Every year, calculate your net worth — assets minus liabilities — and see your trajectory.

Take a committed step towards financial health by scheduling a “Money Hour” every Sunday. This dedicated time to track and plan with your spouse or a trusted partner will not only strengthen your financial bond but also ensure responsible financial decisions.

Pillar 2: Investment Planning and Asset Management

Think of your investments as seeds you plant for future harvests.

• Asset Allocation: For a 40-year-old Indian professional, a balanced approach might be 60% equity, 30% debt, 10% gold/alternatives — adjusted yearly.


• Portfolio Management: Review every six months. A Gurgaon client rebalanced his portfolio from 90% equity to 60% equity/40% debt just before a market downturn — protecting his gains.


• Wealth Accumulation: Harness compounding. A ₹25,000 SIP at 12% annualised over 20 years = ~₹2 crore.


• Diversification: Don’t put all your faith in one asset class. Mix mutual funds, PPF, NPS, ETFs, and some real estate.


• Action Step: Create an “I Can Do This” file — track your SIPs, STPs, insurance, and goals.

Pillar 3: Risk Management and Insurance Planning

Protection first. Before investing aggressively, build your shields.

• Emergency Fund: Keep 6–12 months of expenses in a liquid fund or high-yield savings account.


• Insurance: Adequate term life cover (15–20× annual income), health cover (family floater with at least ₹10 lakh sum insured), and personal accident cover.


• Diversification & Safety Nets: Spread risks — across banks, across products, across providers.


• Action Step: Review all your insurance policies annually. Ensure nominees and details are updated.

Pillar 4: Retirement Planning

In India, retirement is changing. Parents can no longer assume their children will provide.

• Corpus Building: Estimate future expenses (₹1 lakh/month today = ~₹3 lakh/month in 20 years with 6% inflation).


• Withdrawal Strategy: Plan tax-efficient SWPs, annuities, or NPS tier 1/2 withdrawals.


• Lifestyle Design: What do you want your second innings to look like? Teaching? Volunteering? Travelling?


• Action Step: Write your “Retirement Vision Statement” this weekend. Visualise your life at 60.

Pillar 5: Tax Optimisation

Every rupee saved in tax is a rupee earned.

• Income Tax Planning: Use Section 80C fully (EPF, ELSS, NPS), Section 80D for health insurance, and optimise HRA/LTA.


• Capital Gains Planning: Use indexation benefits on debt funds, plan asset holding periods, and harvest losses strategically.


• Tax-Efficient Investments: Shift towards low-cost index funds or ETFs to defer tax and reduce churn.


• Action Step: Meet your CA/financial planner every March to ensure no tax-saving opportunity is missed.

Pillar 6: Estate Planning and Wealth Transfer

Even successful professionals leave this undone — causing disputes and losses.

• Will Creation: In India, a handwritten, signed, and witnessed will can save your family months of legal hassles.


• Trusts: Consider if you have complex family situations or want to protect assets from creditors.


• Succession Planning: Decide who inherits what. Align with your spiritual or cultural values.


• Action Step: Draft a simple will today. Update it after significant life events.

Pulling It All Together: The Richness Blueprint

When you see these six pillars together, you start to see the power of alignment. This is not about picking a product — it’s about designing a life. My role as your planner is to bring these pillars into one integrated Richness Blueprint.