Failing to plan is planning to fail!
Most of us like to dream. We dream of a high flying career, luxurious house, a happy family with all wishes fulfilled. However, most of us however fail to plan. We are so involved in performing our mundane daily tasks that we believe doing the mundane task itself will help us reach end. Finally, we fail to plan for the future. And failing to plan is planning to fail! Don’t believe me?
Say, you are 40 years old and have a monthly expenditure of Rs 1 lac per month. Does this seem high? Not really- include your housing loan EMI, Car Loan EMI, Credit Card and Mobile Bills, Multiplex visits and impulse purchases at malls and honestly, the lac mark is not so distant! Considering 1 lac as the present value of your monthly expense, 20 years later when you retire the same 1 lac will rise to a future value of 5.6 lacs a month. Agreed, your house EMIs would be paid by then, but even if you remove say 50000 of EMI, you will still have to contend with an expense of 2.8 lacs a month (future value of the monthly expense of 50000 net of EMI) – that too when you would have retired. For which you need a corpus of atleast 4.2 Crores, 20 years from now. Are you prepared for that?
Currently, an open heart surgery could cost upto Rs.10 lacs. 20 years later, it would cost 56 lakhs. Your Mediclaim may not be equipped to handle that amount, but you need to be equipped. Are you?
A child’s education (an MBA or an MD) requires atleast 10 lacs today. If your child is 10 years old, you will need atleast 25 lacs, 12 years from now. Are you prepared? You certainly can’t compromise on your child’s education, can you?
A marriage today cost 15 lakhs atleast. 15 years later, it would cost 50 lacs. Try as you might, we can’t get a court marriage done for our darlings can we? Some kind of a celebration is definitely called for, right? So where would the funds come from?
Friends, wake up! Stop those unnecessary indulgences-that Rado watch, that weekend home (where you may not have time to visit every weekend), that Toyota Fortuner etc are not exactly necessary. A Titan watch, a 2BHK flat in Andheri or Belapur is good enough, as is a Maruti Swift.
And what is the need of going to the mall/multiplex every weekend? Buy a VCD player and enjoy movies right inside your house! The money saved could easily finance your child’s future education or marriage! Remember – 5000 rupees saved on every Multiplex visit could go into a SIP of a good Mutual Fund every month and create a good corpus for your child.
Warren Buffet has rightly said “Today, if you buy things that you don’t need, tomorrow, you may need to sell things that you need”
Identify your goals in life. It can be in the form of kids education, emergency fund, retirement planning, yearly holiday planning, kids marriage and so on. Consider the monetary requirement to fulfill each of your goals. Keep a Separate Corpus for each of the goals. That way, you will plan effectively and also can rebalance / reset your goal as and when necessary. Also, one Goal will not suffer due to the other goal eating into a major chunk of your common corpus.
We can watch a couple of less movies, can eat A McD or Dominos less frequently, but we can’t compromise on our Medical emergencies or Children’s education, right?
That brings us back to “Failing to plan is planning to fail!”