Financial Planning to Wellness

Health is a state of mind, wellness is a state of being

Financial Planning to Wellness

Including this topic in my blog section has again something related to Wellness. Simply we all earn money, some earns around 10K per annum some earns 1Lakh per annum some earns 10Lakh per annum and so on. Still we see no one happy with their current financial health and ALSO not sure about their future financial requirement.Also everyone earns well but since they don’t invest properly following things happens,

a) Delay in retirement and also lack of sufficient funds for retirement.
b) Since mediclaim policy are insufficient, this put lots of burden on your financial resource.
c) Untimely death of yours can put your family in very deep trouble.
d) Can’t plan for career switch or job change since you are not sure of your income requirement.
e) Because of above stress they have very effect on your health.

1. Contingency fund – First thing a planner must do is to guide you to prepare a contingency fund. Contingency fund is a fund for emergencies or any untoward incident like job loss, hospitalization of self. This can put you in very difficult situation position since you have bills and emi to pay and their is no source of money. If you have a contingency fund, which is usually 6-8 month of your salary or monthly expense, then you are in safe zone and would take right decision like incase of job loss won’t take any bad job offer for just want of a salary and then repent. Also bills/emi will be paid on time and there won’t
be unneccessary headaches/interest to pay.

2. Life Insurance – Then comes your life insurance which should be usually a pure Term policy. We should not go for anything else like moneyback or endowment policy since latter will not matter since you will be there to help your family financially. But term policy will help your family to repay any loans/liabilities after your death and also your family can have same lifestyle after your death. This also can take care of your child goal. A term policy of 1 Crore has premium of 1/10th of that of money back policy.

3. Mediclaim – This will help me to take care of my hospitalization and of my family. Nowdays a single hospital admission can cost any where between 50K to 3Lakh for accident and basic disease whereas for major illness cost can go to 10 Lakh plus.

4. Goal Setting – Once Step 1,2 and 3 are done then comes goal setting, which means planning for goals which will materialize in 3 month to 30-40 years.
Some example of them
1. Buying a new Mobile.
2. buying a good LED 42 inch TV.
3. Home Renovation
4. Car buying
5. Child birth/First Birthday/School Admission/College Admission/Professional Course fee/Marriage etc.
6. Self Marriage
7. Foreign Tour.

5. Retirement Planning – This is also a goal, but would have many factors to consider and main one is it starts once you retire and ends till you die. Hence requires more focus planning for it. On a boarder term, it says that you should accumulate enough fund at your retirement so that you can manage your monthly expense, medical expense and child goal even if you don’t work and still have same standard of lifestyle as you have now.

6. Will – Finally your will. It should be contains details of all your assets/liabilities (if any). And how you want your wealth to be distributed after your death. This will can be prepare on a simple A4 paper and printed. The will should be signed by attleast two person. One can be your close friend or relative and one can be your family doctor who can vouch for your mental status while signing your will. Will can be register as a good practice and should be periodically reviewed and changes done atleast ones in 3-4 years.

Final word of why we required financial planning is like batting second in cricket where we are sure what we should achieve and when instead of continuously worrying about what should be ideal money i should have to lead comfortable life without worrying about job loss/retirement/Medical expense and on a positive side you can plan a early retirement or start your hobby as a profession where you know how much fixed amount to be kept aside monthly.

 

Comments: 1

  1. admin says:

    Nice article.

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