"If one fails to plan then one plans to fail”
A few points should be kept in mind for effective financial planning.
"If one fails to plan then one plans to fail”
~ Benjamin Franklin
Effective planning is the key to success everywhere. Planning requires meticulous thinking of various psychological and behavioural aspects. Every individual does planning of some type in personal and professional spheres. After marriage even young couple needs to carefully plan various aspects. One of the wisest decisions which a young married couple has to take is to plan their finances in order to safeguard their future and help their children climb the ladder of success.
A few points should be kept in mind for effective financial planning. These points have been discussed hereunder.
Every young couple should try to visualise their future. They should question themselves on certain aspects: Are we happy with our current finances? Where do we see ourselves in 5-10 years from now? What should we do in order to reach to that level? What impediments we might face in reaching to that level?
To start with effective financial planning a young couple should map their monthly or annual cash flows with the cash outflows. This will help them to get an estimated idea regarding the current financial situation on the basis of which planning can be decided.
It is important for every young couple who are in the process of raising the kids to invest in various insurance policies and to safeguard a certain amount of money for the future of themselves and kids. Markets are flooded with various types of insurance policies to meet the growing needs of the consumer. Hence, a young couple should carefully according to the needs should choose their basket of insurance policies. They can also consult a financial consultant.
Every young working couple in India should do effective tax planning to safeguard their income from taxes. May it be taking home loans or investing in insurance policies or bonds or renting a property. The decision has to be taken jointly while discussing with the spouse.
Apart from investment in insurance and careful tax planning, every young couple should also give a thought to other investments like investment in fixed deposit or investment in mutual funds and jewellery. This has to be carefully planned by working out with the consultant.
Many a times, young couples are confused and apprehensive about various financial decisions like, should we invest in this policy? Should we avail a housing loan? Such questions can very well be answered by a financial consultant once he understands the situation.
Young ambitious couple often commit a major mistake that they do not review their financial situation. This often proves out to be a problem in the long run. Hence, it is advisable that both husband and wife should take out time to review and check about their inflows and outflows, assets and liabilities.
Gone are the days when men were considered to be the breadwinner of the family and the duty of the wife is confined only to household matters. The world today has witnessed significant transformation in the dynamics of a husband and wife’s relationship. A successful relationship believes in shouldering and sharing responsibility. Finance planning should be jointly and responsibly worked out by both husband and wife, thereby doing away with the blame-game in future.
Children follow their parents very minutely. Hence, in every sphere of life, especially financially, parents have to set a good example for their kids. The careful and wise planning showcased by them benefits the children in chalking out their life plans in future.
A young married couple loves discussing various topics like family expansion, growth of children, and other household matters. Although, money related discussions are there but they do not take place in an organised manner. Hence, the couple should sit down and carefully discuss various money related matters.
Therefore, by careful and effective financial planning, a young couple lays a foundation of a stronger and brighter future for not only themselves but also for their children.
The author is Professor-Marketing, ITM-SIA Business School