Me and my wife both working and have good monthly income, but still we are not happy!!!

MoneyOne day my friend came to me and told that both he & his wife works in MNC’s. They both draw good monthly salary but they are not happy. He told me that they are not happy because they are worried. They are worried whether their monthly saving is good enough for the future or not. They both started spending less; they do not go for vacation etc. They are confused whether to buy a flat or a land, when to buy a car. Yes, looks like he is really confused and worried.

To help him, below questions were asked to him.

  1. What your current savings are and how much?
  2. Why do you need money and why are you saving?
  3. What major and important financial goals you have?
  4. When do you need the money for your financial goals?
  5. Do you know approximately how much money you need for all your financial goals?
  6. Do you have enough money to handle any financial emergency?
  7. If anything happens to you, how is your family going to survive?
  8. How long are you going to work?

AR_RBasically these questions are for each one of us. My friend is worried because he did not give a strong thought about his financial goals. He does not have any idea how much he needs for any of his financial goals. He is not sure what will happen if any emergency occurs. He does not know which investment product he has to choose based on the purpose and duration of his goals. He was not sure why he needs a Flat or a land, whether he wants to stay there in a flat or invest in a land. He did not think about how to protect his family if anything goes wrong with him. He was randomly saving, also not investing. Since saving and investing are totally different concepts.

There are many people you can see, who work hard, always save (without knowing why they are saving), they spend very less, they do not go to any new place, and they even forget where they kept their money. Whether their investment is taken care of inflation rate or not. One day they become old and die. They never enjoyed their wealth.

AR_RAdvice to him was, to go to a Personal Finance Advisor and create a complete plan and personal finance portfolio. If we have a plan and know how to execute that plan, we can be focused and achieve our goals. In this way, he can concentrate more on his job; he can properly give time to his family and enjoy his life. He will know how much exactly he can plan for yearly breaks, go for movie, go for shopping with his wife, buy a car, buy a flat or a land and spend time for his hobby. He can even decide when to retire happily.

If we have our personal finance on track, we can be free from worries and live happily. Since healthy mind means healthy body. Remember, we have a limited time in our life and there are many beautiful reasons to enjoy our life.

Now India has the youngest population in the world…. what about after 35 years?

people_populationAs per United Nations Population Fund (UNFPA) and Help Age International, India’s population is likely going to ARincrease by 60% between 2000 and 2050 and people with age 60+ is going to increase by 360%. They also said, Indian government should start framing policies now else its consequences are likely to take it by surprise. Complete report present in http://www.gktoday.in/indias-elderly-population-some-fundamentals/ .

In a report “Aging Report” by United Nations Population Fund (UNFPA) and Help Age International, below are the major challenges of population aging:

  1. Financial security: While many developed countries and some emerging economies are challenged with an aging workforce and ensuring the sustainability of pension systems, most developing countries have to establish their systems now when the challenge is less acute and when the fiscal space available for social policies is increasing as a consequence of the “demographic dividend”.
  2. Health: Health is another major concern for older persons. The demographic transition to an aging population, accompanied by an epidemiological transition from the predominance of infectious diseases to non communicable diseases, is associated with an increasing demand for health care and long-term care. Although not an inevitable outcome of growing old, the number of older people affected by mental health problems are increasing due to population aging. Their management has become an increasing concern for both developing and developed countries.

Present Financial Security in India:

  • As per rating agency CRISIL only 8 percent of employees who retire from the private sector in India are covered by pensions while 92 percent of private employees have no income security.
  • As per ‘Retirement Survey’ by Reliance Capital Asset Management (RCAM) conducted online pan India in collaboration with IMRB International, India’s per capita retirement and pension assets as a percentage of gross domestic product (GDP) is among the lowest compared to other economies like Germany, USA and Brazil. India has only 15.1% of retirement assets (as a percentage of GDP) as compared to 21% in Germany, 41% in Brazil,78.9% in USA.

Present Health Security in India:

  • As per Health Infrastructure report 2013, India has Rural 15398 Gov Hospitals with 196182 beds, Urban 4419 Gov hospitals with 432526 beds. Where average population served per Gov Hospital is 61744 and average population served per Gov Hospital Bed is 1946.
  • Awareness about health policies was pretty low among Indians and many still have the misconception that health insurance is meant only for the elderly, according to a survey by Max Bupa Health Insurance.
  • According to world health organization India has 112 ranking in health all over the world.

AR_RAs per the above points, by 2050 Indian Government has to come up with various schemes to solve Financial and Health Security issues, otherwise it can lead to a major problem for most of the Indians. So, should we wait till 2050 for government to make the policies? Government alone can not fix these issues; we also must help our self and government to handle these issues together. Remember we must accept that one day we are going to be 60+.

BoySo what should we do?

AR_R 1. We should make a financial plan, which will take care of our responsibilities and retirement; this will solve our future Financial Security.

2. In the financial plan, we also should take care about Health Insurance w.r.t the future cost. Since in India Medical expenses are increasing at the rate of 10% every year. Which means today’s Rs 1L medical cost will become around 28L by 2050.

3. Since we are aware of Financial Planning importance, it is our duty also to help our friends, siblings, relatives, even our Maid/Dudhwala/PaperWala to inform about saving for future.

Hence do not delay your retirement plan including your medical security. Since it is easy to build a big corpus with little money only if we start early.

Do you want to be a barrier for your child’s future?

B_F_ChildDo you want to be a barrier for your child’s future?AR

  • “What a ridiculous question. How can a parent be a barrier for his/her own child?” I believe this is the feeling right now you have after reading this question. We always try to give our children the best toy, best education, best dress, best food etc. At times we even compromise our own needs for our children.

AR_RCan we assure that in future there won’t be a single moment/situation where we may become an obstacle for our child’s future? Yes, it is very difficult to give an assurance. If we can take care and plan for few things, we can at least try not to be a barrier for our child’s future. I would like to bring forward the following points:

Good health: Along with annual health checkups, if we maintain good health; we can assure that we will be always with our children till they are dependent on us. There are many cases where we see that because of parent’s health a child has to leave his/her studies and search for a job to take care of them.

Health Insurance: Even though we may have group insurance by our employer, we must have personal health insurance plan. Actually this will help us when we require it most, that is at the retirement age, when we will not have company insurance. If we plan to take personal health insurance at the retirement age, there is a possibility that insurance companies may refuse to give one because of various reasons. At that time I am sure we would not like to be dependent on our children. More about Health Insurance, please check here.

Life Insurance: It is always recommended to have good sum assured (preferably Term Life Insurance), which will take care of the dependent if anything happens to the policy holder. None of us would want our children to drop education and search for a job to fulfill financial requirement if anything happens to us. More about Life Insurance, please check here.

This is a very important point, because most of us ignore this or think that it is very early to plan for. Yes I am talking about our Retirement Plan. Since our retirement plan is directly linked to our Child’s Future Success. Nowadays in India, we live in nuclear family. Most of us are away from our parents and the same is going to happen with our children. We might still look after our parents, but it will be difficult for our children to look after us. This is because of various reasons such as high inflation and many other new challenges . If our child wants to choose entrepreneurship path and we are still dependent on them at our retirement era, then they won’t be able to take risk to be an entrepreneur. That’s why it is very important to plan for our retirement, so that we will not become obstacle in our child’s bright future.

This point is very interesting. Can you tell exactly how are you going to spend your time once you get retired? Your probable answer may be it’s very early,” how can I tell now, how am I going to spend the whole day ”? It has been seen that most of the people who have a good retirement plan do not have any idea about how they are going to spend their day. Do you want to sit idle the whole day or look after your grandchildren or just count your days? In some way or the other, we may actually be a barrier in our Child’s Future. Think about this.

AR_RI would like all the readers to give a thought on the above said points as we really love our children and would be very happy to see their success.