On common grounds the various needs of people can be

• Protection against premature death

• Retirement planning

• Protection from disability and ill health

• Education and marriage of children

• Wealth creation

• Wealth preservation

Once the needs have been identified, one needs to quantify these needs and arrive at a suitable time frame. Quantification of needs refers to assigning numeric values (in terms of sum required) for every future need. For example, a sum of Rs. 20 lakh required for son's education or 15 lakh required for daughter's marriage.

Classification of long term and short term goals:

All goals for future need to be classified under the long term or short term. This is important so as to allocate resources effectively for all goals depending on the time frame of them being fulfilled. For a newly married person, his child's education would be a long term goal. So while allocating resources for the same he can invest in secure products which have a long time of maturity and give maximum returns. For example, investment in a PPF (Public Provident Fund) can be a safe and good option for this goal. On the other hand, repayment of the car loan which he has recently taken is his short term goal and he has to plan accordingly for it. Here a PPF cannot work as it has a maturity period of 15 years.

Identification of available resources:

One can only plan for the future when he knows what his existing resources are. The current incomes as well as expenses need to be monitored. The remainder will account for savings which will be used for investment purposes. Now, income would increase over the earning period and so would expenses. So the future amount should be estimated as a compounded value depending on the rate of increment in income as well expenses.