PLAN FOR YOUR FINANCIAL FREEDOM
· Earlier, grown-up children provided both financial freedom and security to their parents.
· Today, in addition to raising their children, parents themselves have to think about their post-retirement financial freedom and security.
A. FOR RETIRED INDIVIDUALS
1. Don’t run out of cash:
· You should keep cash and cash equivalent that can take care of your household expenses for at least six months.
2. Match expenses with income:
· Always make sure you have a regular source of monthly post-tax income for essential expenses.
· This can also include a systematic withdrawal plan (SWP) which can save more taxes for you.
3. Ensure growth:
· Invest a part of your savings to take care of incremental incomes and help you beat inflation in the years to come, to insure you against running out of cash.
· For this, go for long-term systematic investment plans (SIPs) in growth option of good mutual fund schemes, which can also help you to take care of your discretionary spends.
4. Get into another profession:
· You have retired from a job, but not from your life.
· Utilise your learning and experience to earn through options like consultancy and part-time jobs.
· Also, learning and practicing how investments are done is a good option.
· But never spend more than 40% of your time in the new profession and keep 60% of your time reserved for all other things like hobbies, new learning, etc.
5. Get a good financial advisor:
· Do a proper due diligence and choose an advisor who will remain a friend for life.
B. FOR WOMEN
1. Get on top of numbers:
1. Get on top of numbers:
· Don’t let numbers make you nervous by tackling them head on to understand their concepts.
· Investing is about understanding yourself and what you want your money to do for you.
2. Health cover:
· Don’t depend on your employer's health policy alone for any future medical expenses.
· You should also have one of your own, which is cheaper when you start young.
3. Don’t sign anything blindly:
· Even if your investment decisions are taken by the men in your lives like fathers, brothers and partners, always read the documents before signing on them.
· Love with your heart, but sign with your brain.
4. Make your CA teach you:
· Get him to teach you how to save tax through various investment options.
· Sometimes, tax savings can be more than the returns in a particular period of time.
5. Don’t be afraid to take risks:
· The only way to build wealth is to invest, rather than save.
· Risk averseness could be due to not understanding how financial investments work.
· So take small risks in them and learn as you go along.
C. FOR YOUNG AND FIRST-TIME SAVERS
1. Upgrade your skills:
1. Upgrade your skills:
· Invest in yourself to tide over technology innovations and shorter lifecycles of products and services, for growing your income consistently.
· Upgrade your skills constantly through training, learning and development workshops.
· Set a training budget for yourself, just like budgeting for regular and lifestyle expenses.
2. Manage expenses:
· You should learn to differentiate between your needs and wants.
· Once you learn that, you can control your money in a much better way.
3. Get risk cover:
· Buy adequate risk coverage to protect your family from any potential loss of assets and income.
· So, have a term life insurance policy, health covers and also house insurance.
4. Set clear financial goals:
· Measure the goals and how far have you reached at a pre-determined frequency.
· Any divergence from the set course should also call for a course correction.
5. Have a plan B:
· Learn to have a contingency plan, for everything.
· Have an investment strategy in place to take care of your financial needs in case of loss of job, or increase in your loan instalments, which may put stress on your expenses and savings.