CONTENTS
Introduction
It is my great pleasure to share my practical experience with you. I have gone through all these different stages of personal plans for my future, executing, achieving, reviewing and now experiencing retired life. By reading these facts, you will come to know, what was right, what went wrong, what was the plan for the future and what was the target, how did I achieve the target, what were the difficulties, how did I overcome all these difficulties, and finally, how I am going through the retired stage of my life. What could have been done better in these stages so that to make the current retired life better and fully satisfied. I am sure that this sharing will be of great help to you.
Your belief and your plan for the future is going to make your life happy, successful and different.
Your Current Status : Student or Job or Business
If you are student, the future plans of a student could be to concentrate more on your studies and complete your education successfully. You can start your earning initially by working online with any of the various options and opportunities available. You can also apply for your job with a very good CV. Meanwhile, you will have to enhance your Personality Development Skills with including Communication Skills as a better plan for your future.
Are you working in a Government Company or a well established Public or Private Company or a fully Private Organisation? You may get a very good salary sufficient to meet your both the ends. If the salary is insufficient you can take care of your immediate requirements and you can keep applying for a better job with a higher salary or target your professional growth with an increased salary.
What about your future? Are you planning for your better future? Are you putting your plan into action? Most of us are very good planners but the plans remain unexecuted.
Are you saving any money from your current salary? If yes, will this saving take care of your own and your family requirements, any emergencies, celebrations and other occasions? This can give some financial planning for beginners also.
What happens when your children get good education, get a good job, get married and settle down? I am sure you help them and guide them in all these stages with many developmental activities and funding these activities. What happens to you and your wife after your children get settled down?
What are the ways you can plan better for the future and what should be your Long-Term Financial Goal?
If you get sufficient salary, you are happy planning for your monthly requirements and expenses. Some of you prepare your monthly budget as below and spend accordingly.
- Rent
- Loan Repayment
- Groceries
- Clothing
- Dining out
- Household maintenance
- Health
- Emergency fund
- Education Expenses
- Subscriptions and memberships
- Travel and transportation
- Prescriptions
- Entertainment
- Personal care
- Charity or Donation
I am sure you currently have different loans like;
Home Loan
Vehicle Loan
Personal Loan
If you don’t have any of these now, you may go for them in future for your growth and well-being. You might have monthly Equated Monthly Instalments (EMI) to be paid from your salary. You feel happy to pay the EMI regularly, especially when your income is stable. You do have other commitments. Some of you take care of your parents who may be staying with you. You take care of your children’s daily requirements like food, clothing, travel, education, etc.
A Case Study : Practical Experience
This case study could be a plan for your future example.
An efficient, energetic, talented and positive attitude professional, Mr. AD, was working in a very good, well established Government of India Enterprise & a TATA Enterprise for 26 years. He left this company because of an offer for a higher position with a higher salary from a private company.
He took up this new job and started working in this new and fully private company. Mr. MD of this company found Mr AD very good and result-oriented. There was definitely 4 times growth, in terms of Revenue, Staff Strength and also Territory & Technology Expansion with the enhanced services after Mr AD joined this company.
Mr. MD gave him an additional responsibility/assignment with increased salary. After 3 years of growing great, Mr MD started deducting 50% percentage of AD’s salary without any prior notice or without any prior discussion. This amount was not even deposited in any Provident Fund account or in any public savings account earmarked to be returned later to Mr. AD. When he requested Mr. MD to return this deduction, he was told that they would review and consider returning it later. This 50% deduction was done regularly and continued for 2 years period. The total deduction accrued to Rs.11 Lakhs. Mr AD started worrying a lot about this deduction. Because he withdrew his total Provident Fund and Gratuity from the previous company and spent everything for his daughter’s marriage, etc. He did not have any other savings except a few small investments.
Mr MD started giving him lot of troubles and harassment by following many tactics. At one point of time Mr AD was conveyed that his performance was not good and the amount could not be returned to him. Now, Mr AD’s major concern was this Rs.11 Lakhs. Meanwhile, Mr MD remained busy with finding ways and means to retain this deduction and Mr AD remained busy with finding ways and means to get this amount from him. Mr AD started approaching the Employee Welfare Department and the Labour Commissioner’s office seeking their help in recovering this amount from Mr MD of this company. They did give their verbal guidelines and also expressed their inability to resolve this issue directly. Mr AD went through all the troubles and tactics, not giving up hope, and also not compromising on his performance in this on-going job.
Finally, Mr AD took a smart decision as he was 59 years old at that point of time. He applied for another job, went through the interview process and he got a better offer from the new company. Keeping this job as highly confidential, Mr AD conveyed to Mr MD that he was taking an early retirement. Mr MD immediately accepted the retirement note and decision. Mr AD left this company with a happy note. By God’s Grace and Blessings, Mr MD started returning this Rs.11 Lakhs in bits and pieces, i.e. @ Rs.25,000/- per month on an average. Finally and thankfully, this full amount was returned in 2 years time. Therefore, Mr AD’s total loss was only the probable interest of Rs.1.50 Lakhs approximately, he could have earned in these 4 years, if he had gone for any saving. However, he was very grateful that his money was returned to him. This definitely was a positive, happy and memorable event.
What would have been the situation if Mr MD had not returned this Rs.11 Lakhs? What would have been Mr AD’s financial condition? What would have you done if you were in Mr AD’s place?
Health is Important
At one point of time I was getting a 6-figure salary per month as Assistant Director & later as CEO. My wife was getting a 5-figure salary per month as Vice Principal of an English Medium Secondary Private School. I was regularly playing Table Tennis from the age of 49 years as part of my physical exercise. All of a sudden and unexpectedly, I had a heart attack at the age of 61 years. I had 90% blockage in my heart. I went through an angiography surgery which was successful.
After 5 months of this angiography surgery, I had Covid-19 attack also. By God’s grace and blessing, I was miraculously saved from these two dangerous situations. My daily yoga after angiography and my prayer with God’s blessings and grace saved me. Thanks to God. I had to resign from my on-going job and my wife also had to resign from her job to take care of me. We both moved to Canada where our son is staying. Now we are in Costa Rica (part of Central America) with our daughter. Our children are very kind to us and are taking care of us fully.
What is our status now? We are forced to retire early because of my bad health. Are we getting any pension or any other financial benefit to take care of us? I am getting only a 4-figure pension which is very less. Wherein my children have to spend $380 (that is Rs.29,000/- approximately) per month for my monthly medicines alone. How big is a 4-figure pension per month compared to the 6-figure salary I was getting plus 5-figure salary of my wife per month?
What were our financial priorities and goals? What was our Long-Term Financial Goal? What is our current status? This situation encourages me to share my practical experience with you through this article so that you can plan better for your future.
Good Health Insurance and Life Insurance Policies
Luckily, I had two different Good Health Insurance Policies which really helped me financially during my heart angiography surgery. This Insurance Policy was taken from Royal Sundaram General Insurance Company Ltd which helped me financially for Heart Surgery by paying the full amount of Rs.3.20 Lakhs.
I also had Covid-19 Pandemic attack after 5 months of my heart angiography surgery. I was again hospitalized for the treatment. I had another Good Health Insurance Policy from The New India Assurance Company Ltd through Citibank Credit Card which helped me financially for the Covid-19 Pandemic Treatment. Total amount spent on the treatment was Rs.4.45 Lakhs. We received Rs.2.69 Lakhs from the Insurance Company as reimbursement. We had to spend the balance Rs.1.76 Lakhs from our own savings.
I also had taken many Life Insurance Policies with Life Insurance Corporation (LIC) which really helped me financially at different stages including the Policy as Guarantee Document when I went for a Housing Loan with HDFC. I also got very good return when my Insurance Policies were matured. I am really thankful to these Insurance Companies.
You might know that there are Group Insurance Policies initiated and covered by the employers. However, please go for your own Insurance Policies which are very helpful at the right time.
SMART & TIMELY PLAN for better future
Your beliefs and plans for the future should be make a BETTER PLAN for BETTER FUTURE.
Here are some strategies to help young professionals to take charge of their financial future:
- Identify the Problem and Set up further plan and resolutions.
- Take small steps forward towards achieving personal financial goals and objectives
- Think realistically and patiently. Take definite steps with necessary actions for your future safety and security.
- Be ready and be prepared to take few unavoidable risks
- Save for retirement and other long-term financial plans.
- Save for short-term. Start an Emergency Fund. Make sure emergencies don’t become disasters because of lack of funds. Save for mid-term plans too.
- Let us be very positive about our future and everything in life. However, Life is still unpredictable, and it’s important to be prepared and to be cautious.
- Paying off debts is one of the most important financial goals. Tackle and pay off the high-interest debt at the earliest.
- Create a real estate plan. Make it highly possible to buy a home and also a plot of land. You are sure that the value of these real estate do appreciate.
What are your Financial Goals and Objectives?
Traditionally, there are three types of financial goals; Short-term, Medium-term and Long-term financial goals.
Improve your financial literacy, awareness and knowledge. Your financial strengths and weakness will fully depend on this. This gives you an idea; how to plan for your future goals.
How do you plan financial stability for the future?
Planning well in advance works better and strong because: Picturing your goals can motivate you and keep you focused. Planning how to reach your goals helps you set priorities and stay organized. Sometimes you need to do things in a certain order, therefore it’s important to know where to start.
What are your future ambitions?
Some examples of ambition that you might provide during an interview include productivity, efficiency, collaboration, or goal-setting. Perhaps you helped your previous employer increase their marketing reach, overall revenue, or other important qualitative or quantitative metrics. How about doing that for yourself in your plan and goal?
Your Family Commitment and Fulfilment
Before I got married, I took care of my parents, took care of the education of my siblings. After my marriage I continued taking care of my parents and started taking care of my own family. However, I continued giving comparatively less support to my siblings also till they start earning.
These are your family commitment and you need to fulfil them.
Education for your children
Extra-curricular activities (Music, Dance, Sports, etc.)
Dresses and Ornaments for your wife and children
Job, marriage and settlement of your children
Make Investment for your Better Future
Have the following plan of your investment consisting of both Monetary and Material. Take it as future plans list :
I. MONETARY INVESTMENT
1. Bank Balance : Maintain sufficient balance to take care of any emergencies.
2. Fixed/Term Deposit
3. Public Provident Fund (PPF)
4. Small Savings : Post Office Saving Plans
a) National Saving Certificate (NSC)
b) Kisan Vikas Patra (KVP)
c) Monthly Income Scheme (MIS)
Invest a lump-sum amount as Fixed Deposit for a period of 5 years. This will give you an interest on monthly instalment basis (calculated upto 8%) on the amount deposited. Instead of withdrawing this amount for your use, you reinvest it as Recurring Deposit on monthly basis for a period of 5 years. This also gives you upto 8% of interest.
d) Recurring Deposit (RD)
Open the RD Account for 3 years or 5 years. This RD amount comes from Monthly Income Scheme (MIS) on monthly basis. This will give you another 8% (approximately) interest on the recurring deposit.
5. National Pension Schemes (NPS)
Maintain certain Percentage of amount towards purely on Pension Scheme (Tier-I). Your contribution could be either on monthly/quarterly/half-yearly or even on yearly basis.
Also maintain some Percentage of amount towards Saving Scheme within the NPS (Tier-II). This also gives you good earning. However, this depends upon the market condition.
6. Mutual Funds
You can go for monthly Systematic Investment Plan (SIP) of Mutual Funds.
II. MATERIAL INVESTMENT
1. MOVABLE ASSETS
a) Gold
b) Silver
c) Car/Bike/Scooter
2. IMMOVABLE ASSETS
a) House }
b) Land / Plot }
The value keeps appreciating as you are aware.
III. LOANS
Loans help you to buy your assets/property, investment for your business and even for future growth and development. Secondly, they also help you to have a Tax Saving Plan as per Income Tax guidelines. In my case, I had Housing Loan and Education Loan which helped me in Tax Saving Plan.
1. Housing Loan
2. Educational Loan
IV. INSURANCE POLICIES
Insurance Policies are beneficial to anyone looking to protect their family, assets/property and also themselves from financial risk/losses. Insurance plans will help you pay for medical emergencies, hospitalisation, contraction of any illnesses and treatment, and medical care required in the future. They help you for your safety and security. And these policies also help you to have a Tax Saving Plan as per Income Tax guidelines.
Regular Review to know your Savings, Total Wealth and Net Worth
Make Investments to build your savings. Track your money, and redirect it toward your goals. You need to have future development plan and future plan ideas so that to make your life successful and ever green. Get into the habit of reviewing your financial position regularly.
In my life, everything went on smooth. But, since there was no regular Review and Analysis, at the time of planning for my daughter’s marriage, I realised that we did not buy sufficient jewellery/ornaments which was the basic requirement for the marriage as per the tradition and culture. Also, I did not have sufficient savings for the marriage expenses. We had two options; either to go for a marriage loan or to withdraw the provident fund.
We were more concentrating on repayment of loans, children’s education, including higher education, clothing, health, growth with extra-curricular activities. But we did not have a proper plan, goal, regular review and analysis. We landed into practical problems at the time of need.
These Questions to yourself will help you review your financial plan
- What steps did I take that put me closer to my plans and goals?
- Was my spending in line with my plan and goal?
- What mistakes did I make in the last month which could be corrected now?
- Are my financial goals still realistic or is it required to be changed?
- What are the list of expenses coming up soon?
- Am I saving enough to make my retirement comfortable based on my ideal retirement plan and strategy?
- Am I on track with my savings for me, my family and my children?
- What steps can I take to make the next month better?
RETIREMENT PLAN
National Social Security Fund (NSSF) is available in all the Western Countries but not in India.
As per this NSSF, the Government deducts some percentage of amount from the salary of all the professionals whether you are working in Government or Private company. After retirement, every individual will get equal amount as NSSF irrespective of the position or salary grade they were enjoying in their service. This Social Security Fund takes care of your retirement life.
The biggest long-term financial goal for majority of the people is saving enough money to take care of them after retirement.
Government of India is offering 6 different Pension Schemes, namely;
- National Pension Scheme (NPS)
- Atal Pension Yojana (APY)
- Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- Indira Gandhi National Old Age Pension Scheme (IGNOAPS)
- Employee Pension Scheme (EPS)
- Varishtha Pension Bima Yojana (VPBY)
Therefore, you have these options to choose the best scheme that suits your future need and to make periodic contribution to build up your Retirement Fund.
Do you want to be a Dependent or Independent after Retirement?
What will be your monthly income after your retirement?
Do you stay with your children or do you stay with your better half separately?
Do you want to be a 100% Dependent or 100% Independent from your already settled children?
Your Personal Loans and Vehicle Loans would have got paid off fully.
How about your Home Loan?
How about other loan, if any, for your children’s higher education or their marriage with settlement locally or anywhere abroad?
Who is repaying these unpaid loans? If your children repay these loans well and good. What happens if they do not or they are unable to?
What about your health? Are you fully healthy without any surgery or treatment or monthly medicines and tablets to be taken?
Are you retired from your job?
What happens to your Provident Fund, if any?
Are you getting any pension?
Are you getting any Social Security Fund from your company or from the government?
Do you have any savings still left for your and the family future requirements?
Is it possible to Save anything more after your retirement?
Will you be happy and fully feel satisfied, if you become 100% Dependent of your children after retirement?
Won’t you feel like contributing anything more to your children even at this age? How and how much per month? This depends on your effective plan and action.
Your children are definitely happy to take care of you. But you feel that you are helpless and you are a burden to them as you cannot contribute anything in return at this point of time.
We have met many retired and old age parents in old age homes and we have spent time with them. They also frankly expressed that they did not plan their future well. This has led them to such a situation of living in old age home as they could not trouble their children. Even the children find it really difficult to fully support their old age parents especially they need more finance to pay their debts and to take care of their own children’s higher education.
There are parents whose children live abroad and they are unable to keep their old parents with them abroad wherein they are badly in need of love, affection and care from their children.
These are the plans for the future examples and personal financial plan examples for your life.
FAQs on Practical Experience & Current Situation
You will agree with me. These are the Frequently Asked Questions (FAQs). Answers to these questions will make you analyse, become aware and allow you to take very realistic steps to plan further for your future. These are the questions and answers based on my own practical experience.
What went right during my earning period?
I changed my job for a better growth and for a higher salary. There were financial challenges and financial expectations with ambitions.
I was able to make a good plan, monthly budget and I started making good investments as per the investment list mentioned above.
What went wrong during this period?
I did not make a better future plan of my life with necessary goals, especially to take care of me and my family after my retirement. I could not visualize early retirement life. I wanted to work at least till the age of 70 years, but I retired at 61.
My periodic review, assessment and analysis were absent, because I was busy with many things.
I did not set up a proper goal and target for the future. I could not read any such article sharing such practical experience like this.
What was the plan for the future?
I was only very positive about future as my present condition, earning and position were very good. I never thought that my health would become bad. I never thought my wife also would resign and retire early because of my bad health condition.
What was the target?
I did not plan and set up any remarkable and achievable goal or target. I didn’t realize the importance at the time of earning. This makes me suffer only after retirement.
How did I achieve the target and how will you achieve your target?
Firstly, I did not set up any target. I kept on investing as and when it was possible. I kept on buying movable and non-movable assets as and when I had some extra finance with me.
I should have set up a target for my Retirement Fund. I did not realize the importance at that point of time, but now I am going through this experience with less monthly income.
What were the difficulties and how did I overcome all these difficulties?
I had no savings for children’s higher education. I had to go for Education Loan. I used to save Income Tax under the section 80E on Education Loan.
No savings for daughter’s marriage. I had withdrawn my Provident Fund. I did not go for another loan.
Salary deduction on monthly basis which had no assurance of getting back.
Sudden Health problem forced me and my wife to resign from the on-going job. I could not sit idle at home. I learnt Digital Marketing as I was very comfortable with traditional marketing with Management.
I have no sufficient monthly pension to take care of my on-going monthly medicines after the heart surgery. This situation forced me to fully dependent on my children for my monthly medicines and everything.
Finally, how am I going through my current retired stage of life?
I wanted to work till the end of life so that I can contribute to the poor and the needy also, because I started my career in a Social Service Society and I want to end with Social Service.
I have become 100% Dependent on my children who fully pay for all my expenses. At times, I feel uncomfortable in frankly asking them whatever I am in need of as I don’t want to trouble them much. Because I was very active in earning, planning, taking decisions and spending.
I am unable to fully utilize my capabilities, expertise and techniques after retirement. This has put me in an inactive stage.
What could have been done better in the earlier stages so that to make the retired life better and fully satisfied?
After withdrawing my Provident Fund from the well-established TATA Company, I should have continued my Provident Fund in the last 6 years of my career when I was working in Private Companies with a higher salary. (i.e. Financial Years 2014-15 to 2019-20)
I had more options like PPF (Public Provident Fund) & VPF (Voluntary Provident Fund). I should have taken advantage of these schemes.
I started the National Pension Scheme (NPS) only in March 2016. The main objective, at this time, was Income Tax Saving option with maximum amount of Rs.50,000/- (tax exemption limit) per annum. I should have started the NPS much earlier and also with the contribution of higher amount per annum. This decision and appropriate action could have put me in better and comfortable position with very good return as Monthly Pension.
In 3 different financial years, I paid more Income Tax from my salary. This could have been planned and executed better so that my saving could have been more.
| Financial Year | Income Tax Paid by me |
| 2014-15 | Rs.159,319=00 |
| 2015-16 | Rs.167,421=00 |
| 2016-17 | Rs.198,711=00 |
I could have planned better with more Tax Saving Schemes so that to have taken advantage of tax saving plans and to have saved or invested more for the future rather than paying such a high tax.
I am sharing these things with you so that you can become aware, take more precautions, have a better personal financial plan to save and invest more so as to take care of your future.