Changing Financial Priorities According to Age
Financial planning usually involves taking a different approach at different stages in life. Typically, financial planning begins either at the end of a fiscal year or at the beginning of a new one. However, it's essential to understand the specific considerations required for financial planning in five different situations:
1. After a Change in Income:
When your income increases, you can allocate extra earnings towards achieving specific financial goals, such as increasing your life insurance coverage or enhancing your health insurance. On the other hand, if your income decreases or stops, it's crucial to reduce unnecessary expenses and make use of previously accumulated savings.
2. Key Life Events:
Significant life events like marriage, the birth of children, and other social milestones often come with financial responsibilities. Planning for these events involves ensuring you have funds set aside for expenses and potentially considering debt management if necessary.
3. Educational Expenses:
When taking on educational loans for yourself or your children, it's important to integrate this into your financial plan. Consider how you'll repay the loans and if they should be part of your long-term financial strategy.
4. Major Purchases:
Many Indians aspire to own a home or a car, which are typically major expenses. These purchases often lead to increased costs in terms of maintenance and other associated expenses. It's crucial to include such financial commitments in your financial planning.
5. Aging and Healthcare:
As you grow older, healthcare costs tend to rise. It's wise to anticipate and include healthcare and life insurance in your financial planning, taking into account inflation and the changing health and life insurance needs over time.