Stepping out of university to start a career in the corporate world is a refreshing feeling. It is a major turning point for a youngster who has, hitherto, felt like a child safely protected in the family nest. No doubt, your parents would still continue supporting you whenever required, but the stage is set for you to gradually be on your own and build your own nest.
The First Pay Cheque
Starting a career is exciting and so is the feeling of earning money through your own hard work. But this is also the time to reflect on your aspirations, goals so that you invest in the right savings plans to secure your future. Let the career start with a bang, by investing a portion of money from your first paycheque. Your joy of the first paycheque will be doubled when you realize that your invested money will work as hard as you to give you benefits in the long run.
The Unforeseeable Future
At this stage you may be single and with minimal financial commitments if your parents or siblings are financially independent. But don’t let the guard down and rather visualize your future instead. In a dynamic world, jobs and employments are uncertain and prone to market risk. Saving money when you can, is more important than parking it for a future date.
Nowadays new life-threatening diseases are emerging by the day and while the treatments are available, healthcare costs are also spiralling. In such a scenario, health insurance is a necessary solution to avail medical treatment without risking the family’s future.
As a single, never married person, you may find it difficult to estimate the expenses that lay ahead in the journey of life. Thus, keeping in mind the unknown future, you need strong provisions to deal with the pleasant and unpleasant financial needs that you encounter.
A disciplined spending of up to a maximum of 50% of your income should enable you to use your income to build a financially strong future for yourself. Here’s the order in which you allocate the remaining 50% of your income towards this goal:
1. Emergency Fund
Emergencies do not come with a warning. Salary incomes are uncertain, especially if you work for private sector enterprises. Medical emergencies can cause a temporary loss of income in addition to piling incidental expenses that may not be covered by standard Mediclaim policies. Some money should be handy to overcome these unforeseen expenses. Assets such as land, flat etc are highly illiquid because you cannot dispose them off at short notice. Fixed Deposits (FDs) and similar financial instruments are ideal choices because you can withdraw money at your discretion.
2. Protection Insurance
Insurance is an important component of any investment portfolio. Term life Insurance policies such as iSelect Smart360 Term Plan, from Canara HSBC Oriental Bank of Commerce Life, offer a comprehensive joint-life plan that you can avail along with your spouse.
If you are currently single, you can add your spouse later on and also save money by opting for a joint policy instead of spending money on two separate policies. This pure term insurance plan will give you peace of mind that your family will be safe in case of your unfortunate and untimely demise.
Healthcare costs can be taken care of if you avail of a Mediclaim policy such as Health First. The insurer has cashless facility at networked hospitals that ensures your medical treatments do not create a dent in your pocket. when you are already stressed due to issues pertaining to your health.
3. Home Sweet Home
Life happens. You marry your sweetheart, dream of building that cosy house where your family would live happily ever after! Sounds like a fairy tale? Yes, it is, unless you invest in wealth-creation asset classes. Your friends may have recommended equity schemes and tax-saving mutual funds that helped some acquaintance get rich.
Directly investing in equities works if you know the modus operandi, have the time to monitor and are an extremely knowledgeable/disciplined investor. But most people neither have the time, nor the expertise to manage equities. Invest 4G gives you the best of the world of equity funds clubbed with the safety and security provided by life insurance.
If you are looking at a guaranteed return, you can explore the Guaranteed Savings Plan. This plan gives you the peace of mind that you will receive a definite sum at the end of the tenure. You can plan your house construction/purchase accordingly.
Retirement is fun only if you have planned your finances well. You must allocate at least 10%-15% of your current income for investment in your retirement kitty. You may have an Employee’s Provident Fund (EPF) but that may not suffice. Invest 4G can help your funds grow faster by investing in equities when you have a larger risk appetite and move your wealth to more secure debt funds when you move closer to retirement.
Image 2: Allocation of your income to various financial needs and goals
Reimagine Your Lifestyle
Life will never be the same at all ages and stages of your life. You must visualize your needs, aspirations and goals for every age besides factoring in expansion of your family size, newer expenses, etc. Reaching out to a financial advisor can be helpful because advisors can chart out your life journey and recommend options that can create wealth, protect health, safeguard your loved ones and give you another reason to cherish life to its fullest.