As working and responsible individuals, we all earn and yearn to ensure a quality life for our family. We take steps that can give them a comfortable life even in our absence. Our financial goals revolve around their aspirations and future needs. But all this requires a great deal of planning and regular flow of funds. On Family Day today, consider these five ways that can strengthen your financial planning for your family.
Cover Yourself And Family From Risks
Life is unpredictable. So as a first step you should buy adequate insurance to protect those who are dependent on you financially. There are various types of insurance plans available in the market, each one catering to specific requirements. For example, a Term Insurance policy safeguards your family by providing funds after your death. Similarly, you should buy a Health Insurance for yourself and family to deal with medical emergencies that come unannounced. A decent-sized family floater is highly recommend for securing your family medical needs as it saves from the hassle of managing multiple insurance policies by offering several benefits under a single umbrella plan.
Creating an emergency fund for your family is another step that should be a priority on your financial planning list. An emergency fund comes to your rescue whenever there is an emergency and you need money at short notice. Your emergency fund is not an investment but a fund that ensures financial safety during an urgent need. Consider a period which should last no longer than six to 12 months while building this. You can park your money in a Savings Bank Account, Recurring Deposits or Liquid Mutual Funds to create this corpus.
These are a great option if you are looking for long term wealth creation. Mutual Funds offer a variety of investment options be it for wealth creation, liquid savings, or tax savings.. Before you invest in this medium, consider and understand all the aspects involved. Seek the help of a financial advisor who can assess your needs and help you with the right kinds of funds. You can also invest in Systematic Investment Plan (SIP), which facilitates wealth creation in a disciplined manner by investing an amount regularly for a period of time. When investing in mutual funds, it is best to start early and stay invested for long to ensure maximum wealth creation for your family. For example, an investment of Rs 5,000 per month at an annual rate of return of 12 per cent by a 25-year old will give a corpus of Rs. 49 lakh by the time he turns 45.
Investing For Child Education’s
As a parent, you would like to ensure quality education for your chil without financial constraint. If you start planning for this as early as possible, it will reduce unnecessary anxiety for your family when the time comes to shell out the money. Again, investing in an appropriate mutual fund would give you desired results at the right time. You can consider equity mutual funds that have generated close to 12%-15% annualised return over the past 10 years.
Investing For Retirement
For a peaceful retirement, it is important that you plan your finances well in your youth. The rule remains the same – start investing as early as possible. Consider your and spouse’s regular and medical expenses before investing and building the desired corpus. Invest regularly during your earning years for best results. A good retirement corpus would ensure non-dependency on your children for your material needs in your retirement years.
Have a great family time together!
The writer is CEO, BankBazaar.com.