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Yogi Zone

Useful articles for your finance management by our team of experts

7 financial planning steps you need to take for your dad

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When we think of “FATHER” the thoughts cross our mind is about a person who is forever with his family and always there for his children no matter what. As a kid we considered him as our “superhero” or “role model”. He keeps encouraging and motivating in every good deed we do. He is truly one of the most important persons in our life.

Father’s Day is one day in the year when our love and concern should be expressed and articulated. In 2011, this special day will be celebrated on 19th June worldwide. Most of the children celebrate this special day with dad by giving gifts, visiting nearby multiplex and watching his favourite movie, having a lovely lunch or dinner at his favourite restaurant. This year let’s plan to celebrate father’s day a bit differently and surprise him with your gratitude. Show, you too care about him as much he did throughout his life.

The crucial role of a father is to plan for financial future and spend on child’s education, marriage, fulfil goals of a family, etc. The most of Indian fathers look into financial planning in an unorganized and traditional ways. On this special day let’s assist him in getting organized in the basic financial planning arena which will play a crucial role in years to come. It will also help him in leading a happy and independent retired life.

  

7 Financial Planning steps for your father are as follows:

clip_image001Compute cash flow statement

The cash flow statement calculates income and expenses. This statement shows the savings on hand at end of every month. This savings can further be utilized in investments. After, analyzing the statement your dad can control unnecessary expenses in a month. It can be used as a reference to compare flow of cash in month-on-month basis while reviewing. Keeping, this record handy makes it easier to analyze the financial situation at end of year. Suppose, if your father is not tech savvy then give him a print format to fill details and maintain records. You should add these information in excel to compute this statement at end of every month.

clip_image001[1]Looking into debt management

Your dad would have taken loans at various stages of life i.e. home loan, car loan, education loan for his children fees or personal loan to set-up business, etc. You can help him by compiling equated monthly instalments (EMI) of various loans he is paying. Calculate the time-line to pay off each loan taken. This gives him a better clue on how much he needs to earn and save to pay off these debts.

clip_image001[2]Analyze retirement solutions

During his life, he would have saved the earnings in various retirement products to secure retired life. These products would be pension schemes, provident funds, etc. Assist him to know the savings in each instrument till date. Calculate whether this savings are meeting his expenses and goals for happy retired life. You should consult a professional financial planner for further assistance and advice in retirement planning.

clip_image001[3]Analyze insurance deeds

Nowadays, the rising inflation impact medical costs. So, it’s a must to have medical insurance coverage for all family members. Maintain a record of each medical policy with its coverage and premium paying dates. So, he renews the policy on time and it doesn’t lapse. Also, analyze the life insurance policy of your dad. There is easy-to-use insurance calculator on InvestmentYogi website. Here, you can compute the sum assurance required and match the figure with policy taken. If there is short fall in sum assurance then recommend him to increase the sum assurance in this policy while renewing to secure family expenses and pay-off of debts in any unfortunate event.

clip_image001[4]Maintain the record of investments

It’s very common among older generation to invest the amount in fixed deposits for certain time-frame then forget to withdraw or renew when term gets over. Also, he doesn’t maintain proper records while investing in equity. Explain him the importance to maintain record of investments and tracking the performance of all investment products. Further, if you have the skills then analyse his investment decisions considering risk appetite and goals. Also, explain the asset allocation and performance of these investment products time-to-time. Alternately, recommend a financial planner to look into investment planning decisions. They can guide your father to achieve set goals in prescribe time-frame.

clip_image001[5]Explain importance of estate and succession planning

Explain him the importance of estate and succession planning by arranging a meet with a lawyer. This professional would frame an estate and succession planning based on input and recommendation from your father.

clip_image001[6]Maintain one point of reference

Most fathers’ in India don’t maintain one point of reference to preserve important documents like insurance policies, investment records, payment receipts, loans, bank account details, birth certificates, marriage certificate, driving license, pan card number, tax filing records, etc. So, it’s difficult to fetch certain information / documents when required urgently or while filing a tax. You should recommend maintaining a file for each subject area and keep them in a section folder by giving prescribe tags. Following this pattern would keep the documents in organized way.

Also, maintain an emergency diary with important contact details at one place. These contacts must include family members, family doctor, insurance advisor, financial planner, tax consultant, medical stores, nearby hospital, ambulance services, etc. Maintaining these crucial contacts in a diary makes it easier to approach right person at right time during critical situations.

Executing above discussed points would be appreciated by him. You need to review things once in a month and keep regular updates whenever situation changes. There are circumstances wherein, he may not able to adopt on keeping record or following such things so keep assisting him for better future.

  

Source: InvestmentYogi

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