Tuesday, November 29, 2016

The Basics of Financial Wisdom That Schools Don't Teach You

With generations of people now living in constant debts and surrounded by temptations of credit and luxuries beyond their means, Financial Planning becomes more important than ever. But unfortunately, our schools don't teach them and our media sources are sold out to advertising that preaches exactly the opposite. And that is why I chose to put this out there for the few that will listen to this much needed advice. A lot of it is inspired by the 30:30:40 principle and by Dave Ramsay's books.

This is just a quick glance at the most important basics:

The Fundamentals of Financial planning

1. 30 % of your income must be used for monthly living expenses.

2. 30% of your income must be used for Liabilities repayments.

3. 30% of your income must be SAVED for your future LIVING.

4. 10% of your income must be spared for entertainments, vacations………..

5. 6 month monthly income must be available for emergency fund  { LIQUID FUND },  it can be CASH or cashable investments.

6. Home loan must be registered and apply  on both husband and wife name.  {Both can get benefits on Home loan Tax benefits}

7. Buying second house for investment is not advisable  [ Survey reports - it will fetch you only around 3% return]

8. After age 45 years not supposed to enter into any BIG LIABILITIES [reserved for Higher education of children and wedding of children which generally will happen around 45 to 50 only - incase you have them or you save this for your retirement dream plans]

9. Joint account is compulsory @ Bank savings account.

10. Property must be registered on both Husband and wife name. [As per legal act – after husband first legal heir is wife, after wife it will go to children only]

11. Regularly check on Nominations at all financial instruments.

12. Only in insurance policy,  Claims payable to Nominee.  In other financial instruments legal heirs certificate is must to get back the settlement

13. Don’t take any financial or investment decisions  EMOTIONALLY

14. MEDICLAIM is must [ in spite of Group mediclaim coverage given at office [After retirement there is no mediclaim coverage. After 50 years its very tough to enter into mediclaim]

15. For your jewelry LOCKER,  Only one lakh is payable by bank,  if theft or fire happen at bank. Provided insurance done.

16. Like same way Government guaranteed only one lakh for your FD also. [Fixed deposits with Banks upto Rs. 1 lakh only are backed by deposit insurance]

17. Must know all tax implications.  You cannot avoid paying tax. But you can minimize by way of investments.

18. All financial documents must be kept safely.

19. Financial investments must be followed through personal financial advisor.

20. Review your financial portfolio every six month.

Hope this advice helps.

Pushkaraj S Shirke

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