Are you prepared for your milestones?

There are various milestones which we achieve in our lifetime. Each of these brings some changes in our priorities and financial requirements. To accommodate these changes and to move ahead to achieve the goals we have identified, one has to prepare well. Sometimes the change may require a big financial support or financial planning to proceed further in our life. Here are some of the milestones which we will have to go through and we should be well prepared to accommodate them without affecting our financial well-being:  


1) Your First Job: Is always a memorable milestone. You aspire to become self -dependent as you start your career. Your planning at this stage can either do wonders or may disturb your financial well being in future. Start maintaining an emergency fund as contingency planning measure that you do not have to rely on your parents in case of need. Work out your expenses and build a 6-8 month contingency fund. Buy a medical insurance to meet expenses arising due to health problems. Make sure to work out your insurance amount with the help of risk profiling so that you do not over commit and drain your savings. You can add accident and life insurance cover based on your work profile. Adding a term insurance can be advantageous for some who wish to start their married life very soon. The premiums are very affordable and remain the same for the entire term and they are cheaper when you are young.

2) Mid-Career Changes: You are looking for change in your job either due to dissatisfaction in the current job or increase in your financial requirements. For some who have responsibilities of their parents will find meeting both ends difficult if not prepared. Start with an emergency/ contingency fund of at least 6-8 months expenses as there might be months in between job change, which may go without an income. You have to make sure you meet your basic monthly expenses during this period comfortably. When you get an increase in your salary you have to provide for all your financial goals- meeting expenses, provisions for family, parents care etc. Buy adequate health & term insurance to meet the unexpected. Once you set for a change, plan for your life goals. Do take up advice from SEBI registered investment adviser or certified financial planner on financial risks as they can guide you more precisely. 

3) Marriage: Your lifestyle changes with increase in family. Since you will have to support each other after marriage it is good to discuss your protection needs and identify if there are any gaps. You can buy adequate insurance covers supplementing each other. Sooner, you will plan to have a child in your family. It’s always wise to start planning for the child as early as possible as you have to make a long term commitment for his/her expenses. Start with a small amount of savings and increase allocation as you reach the desired stage. This is the stage to take up Investment and Retirement planning seriously to meet future financial goals.

4) Birth of a Child: Always a joyous moment in every parent’s life. Sooner, the concern of child upbringing starts revolving around you. After the child is born, add him/her in your health insurance policies to cover any health related expenses. Start allocating part of savings towards your child's need by investing in various asset classes. You can do it with child saving/Investment accounts by transfer periodically from your own account. The earning parents should have adequate life insurance on self to protect family financially when one is not there. It will always be a wise decision to start planning for your child needs even before he/she is born. The funds should get allocated for education planning of a child to meet the increasing education cost.

 5) Getting Retired: Retirement is the biggest milestone to reach as you plan to stop working beyond this. As you are near your retirement your retirement needs evaluated by Investment Adviser approved by SEBI. This will give you estimation of how much you will exactly require for meeting your expenses. Do provide for other expenses like gifts to your grandchildren’s etc, to arrive at an accurate figure. Evaluate your sources of income to check if there is any gap so that you can work on it before you retire. This should include your retirement fund expected from PF, Gratuity & superannuation, maturity proceeds of your insurance policies and all other sources. Recheck your health insurance coverage and enhance it if there is any shortfall. Once retired, get all your savings together and invest to get the desired income. Do not forget to execute a will for your assets with the help of estate planning. With proper financial planning throughout stages of life, you can enjoy Golden days of retirement peacefully and happily. 

The milestones discussed above are stages of your life cycle and you tend to make mistakes if not prepared in advance. Financial Planning is a very dynamic process as it accommodates all these changes. Plan with it so that you do not put unnecessary strain on your finances and your family has adequate protection from emergencies arising in future. A trustworthy certified financial planner will be able to guide you on this. 

Last modified on Friday, 16 August 2013 13:35

Prakash Praharaj

Shri Prakash Praharaj has a passion for excellence. He has been awarded two gold medals for securing top positions both in Graduation and Post Graduation in Commerce. He is an MBA with specialization in Finance and marketing. He has been awarded Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is a Certified Financial Planner from the Financial Planning standards Board, India (FPSB), affiliated to FPSB, Denver, USA and Certified Personal Financial Adviser from NISM. He is also a SEBI registered Investment Adviser vide Reg. no. INA 000000045 dated 2nd August 2013.His book "Your Every day guide to Personal Finance and Insurance" has been published by CNBC TV 18 in August 2015.


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