MARRIAGES AND CHILDREN EDUCATION EXPENDITURES AND FINANCIAL PLANNING

These are two major reasons why even those who work for many years with good salaries retire with not so great net worth.While lack of planning is the reason in many cases in some cases usual planners mechanically prepare a file with very long term plan based on the inputs given by an individual. While I am all for Financial Planning I am against such long term plans as there are too many variable and in most cases these plans don’t work as planned savings or SIPs are not done due to unforeseen expenses etc.

It may be better to plan for 3-5 years ahead with goals like , I would like to contribute as much as possible for children higher education or save for marriages or giving support to children when they get married. Like charity begins at home ,one must give balanced consideration to own  needs present and future first.    

Marriage Expenses

In India many people have accepted as absolutely essential expenditures on marriages.Marriage is no doubt a big event for the couple getting married as well as their parents. Close relatives will join in to make it memorable too. Rethink is required in cases where the expenditure is excessive because it is :

1. Not affordable and not planned

2. Merely to show off wealth

3. Being made from loan taken rather than savings

4. Unplanned and beyond budget so will affect the parents’ retired life

Other reasons why expenditure in marriages needs to be curbed are:

1. It leads to unhealthy competition in society

2. Parents repay loans over a long period

3. It needs to be compared with use for the couple to settle down versus one day enjoyment

4. Newly wed couples can consider bonding better by visiting some near and dear ones rather than meeting all in one day when they don’t even remember their names but get fatigued with constant smiles.

Children Education   

This again has become an issue because the cost of private schools and higher education is rising and either such expenditure is not planned or planned amount is not enough. External factors beyond control can at times very adversely affect the finances of a family especially if the education involves going abroad.

Money and expenditure alone is not enough to educate a child well to become a good human being.

If a student takes loan for studies abroad specially in USA in present scenario then the loan is usually guaranteed by the parents. If a student is not bale to find employment and has to return to India repaying this loan with earning in India even if one gets a job is very challenging and parents too may lose their retirement funds if they have to repay this loan.

Even some young parents earning well spend a very high amount which affects their overall savings and financial planning in the long run on private coaching and private schools.    

Prudent Financial planning, saving and investments will help and can be started at any age and will lead to a happy life too.

This week’s blog deals with two major causes why people with high salaries also do not have high net worth after long service

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