Importance of future planning and financial security | Financial plans and strategies are to be changed according to the need and budget

September 11th, 2010| News.

Importance of future planning and financial security | Financial plans and strategies are to be changed according to the need and budget


Young age, high salary, family values and responsibilities are the life style of common middle class people.  If there is no proper planning of finances, responsibilities become a burden.  So it is better knowing how to plan the finances.  Planning should be done depending on the income and responsibilities of that person.

Financial security

If there is only one earning person in the family of five, such family needs an insurance which is helpful in emergencies.  For example, the annual income of a person is 2.40 lakhs.  This person should take insurance policies equal to ten times to his annual income that is not less than Rs. 25 lakhs.  Premium would be high for common insurance policies.  It is better to take term policies who offer more coverage with fewer premiums.  The aim of these policies is financial security.

Health insurance policies are also to be taken compulsorily by the middle class families.  Take family floater policies that are applicable to the whole family.  Discounts are also available with these policies.

Money for emergencies

Nobody can say when the need of money arises.  Therefore every family should save some money for emergencies. It is not a good practice to keep the money in saving accounts for the convenience of drawing the amount whenever the need arises.  For short term investments, Cash fund schemes of Mutual Funds are available.  Cheque facility is available for the investors.  Minimum amount that has to be deposited for year is Rs.5,000.

Tax concession

If the annual income is Rs.2.40 lakhs and the common deductions are up to Rs.1,60,000.  Tax is to be paid on the remaining Rs.80,000.  Rs.1,44,000 are meant for family expenditure.  So the amount left is only RS.96,000.

When responsibilities are more, bearing losses is difficult.  So give importance to schemes which give security to the principal amount and also the amount.  Public Provident Fund can be chose for depositing money regularly.   Rs.500 to Rs.70,000 can be deposited annually.  The person who has an annual income of Rs.2,40,000 can deposit RS.5,000 in PPFs. Another Rs.5,000 can be saved in National saving schemes.

For the future of the children, good equity fund should be selected.  Tax Saving Fund also should be selected to get tax concessions.  Invest every month in Systematic Investment Plans.  If the job is transferable, there is a chance of promotion.  There is also a chance to settle down at some place.  It is better to plan for an own house at that time.

Financial planning is not a onetime affair. Changing plans according to the needs are compulsory and it is inevitable also.

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