The first thing that hits you about wealth creation is several techniques and tutorials that leave you more confused than ever! Especially if you are someone whose knowledge is basic when it comes to financial solutions and the whole concept, its pathway can be daunting. Besides, you need to consider the fact that every individual has unique circumstances and expectations out of future. So, one financial mantra cannot be applied to everyone blindly. Wealth building needs to be approached with logic and a goal. So it is important that you organise your thoughts, goals, financial sources and limitations in the form of a blueprint. A ready to refer step by step document like a blueprint makes it easier to plan and structure your wealth creation goals and pave a practical path to it.


Wealth Building / Financial Blueprint Defined

A blueprint is more than a rough plan, it is a document with concrete figures, planning and analysis of present vs future. A wealth building or financial blueprint too works on the similar lines, and includes wealth creation strategies that would help bridge that gap. In simple terms, it is a finance budget and forecast of your life. Blueprint can prove to be monumental in establishing certain positive behavioural patterns on spending and savings as well. With your target set and facts put right in your face, it is a matter of following what you set yourself for.

In their book ‘Rich Is a State of Mind: Building Wealth and Happiness: A Blueprint’, the authors Robert M. Gignac, Michael J. Townshend define financial blueprint as a clearly defined structure, assemble of all pieces, defining your plan to create financial future, but no fine details. The authors also recommend creating a blueprint about wealth and finance, using the best of our abilities.

Why Blueprint?

1. Defines Your Foundation: Like any flow chart or design, you need to have a clear idea of the starting point. A blueprint lets you do this in a very effective manner. It helps you in taking a comprehensive stock of your present financial security. Defining your present circumstances gives you time to reflect on your income flow, expenditure and savings. It also helps you in drawing lines between the three and explores possibilities of saving more.

2. Setting Goals: Though most of us are usually very confident about what we want in future; say, an early retirement, a house, steady income flow post retirement etc. However have you ever tried to work out the numbers in terms of wealth and assets you would require to support your expectations? When you build a blueprint, this is exactly what you will be doing. A blueprintsolidly defines numbers and figures that form your goals.Also, when you set goals, you remain committed to your investment and are not tempted to withdraw the investment. This way, you become more disciplined and are likely to achieve your financial goal.

You should think about investing inlong term goal oriented plans such as a Unit Linked Insurance Plan (ULIP). It helps in definifing your financial priorities at different stages of life. For example, you can choose to allocate a higher amount in equity funds in the early policy term as you have lesser liabilities and more disposable income at hand. As your family responsibilities such as child’s higher education or marriage increase, or inch towards retirement, you can switch your funds to debt or balanced portfolio to ensure security of your investments. A ULIP ensures disciplined and systematic investment based on your lifecycle based portfolio strategy.

3. Planning Investments & Debts: So you have your starting point, goals and you know the gap that you need to bridge between the two over a fixed period of years also defined by you. Once the numbers are there, you are better equipped to handle and find ways and means to reach your goals. You can analyse your savings expected over years and apportion them amongst various available investment vehicles. You can fix certain percentage to be invested in high risk-high return instruments, keep some as liquidity and others in low yield- low return options. Debt is not always a bad thing and a blueprint will help you assess the sources that would assist you in servicing it so that it does not spiral out of control.

4. Tax Management: Have you ever cringed looking at that big chunk of tax you pay every year? Put that tax figure in the blueprint and then jot down various means of eliminating it or at least reducing it. Building a house by taking house loan, setting off of losses in business, admissible expenses, exemptions on investments are some of the methods you can choose from. This way the amount that would otherwise go into tax would be used for creating future assets. While creating a blueprint, you could include the tax saving instruments you would like to invest in.

Many financial institutions that offer tax benefits, apart from savings and life cover. For example, if you make an investment of Rs2,00,000 in a ICICI Prudential wealth plan, then you can claim it as a deduction from your total income under section 80C in the year of investment upto the maximum limit of Rs.1,50,000. Further, say, if you earn Rs2000 from your asset allocation (equity, debt or balanced), then you can claim tax exemption on this capital gain under section 10 (10D). In fact, the maturity benefits are also tax free.

So, a wealth blue print also helps you to identify and define your tax management goals and achieve them accordingly through the right investments.

5. Getting on With it: Creating a blueprint is not a simple task and needs a lot of detail and patience. It is advisable to share it with wealth managers and use their expertise for building a sustainable plan towards your financial freedom. Many websites facilitate blueprint creation on their platforms as well that you can make use of. Quite a lot of wealth advisors conduct seminars and workshops that guide you into creating your own wealth blueprint.

However, one thing to remember is that wealth creation is persistent and disciplined hard work throughout. There are no free handouts here! But, a blueprint would definitely make it easier for you.