Plan for contingencies to avoid money mishaps

Job loss

Last year, when a prominent airline failed, there very many stories of how its staff had to sell gold in order to survive. This may not be surprising in the case of ground staff, but hearing this from highly paid pilots was a surprise.  Due to bad or no financial planning, individuals are grossly unprepared when hit with job losses. Further, they have many loans outstanding, making matters worse.

While having a financial plan alone is not enough to deal with these situations, it is at least a start towards ensuring that you are on the right track on savings. While planning, keep the following in mind.

– Always look at ways to save more by reducing lifestyle expenses. You don’t need to prove your lifestyle to anybody, especially at the cost of your financial security.

– Discuss with your spouse regarding financial responsibilities that could come up – like that of dependent parents. Keep in mind that there could be a time when you would need to provide for both set of parents.  You would know your siblings’ disposition on this matter. Whatever the case, accumulate the amount that you think could be incurred on dependents. Include it in your financial plan in the form of a goal.

– Assess the critical illness covers available for parents and try to get a cover of at least Rs 10 lakh. A critical illness cover gives an amount on diagnosis of a serious ailment, if the patient survives it for over a month. The money received from a critical illness policy can be used towards any expense, not necessarily medical. In the above case, the critical illness policy would have helped to partially take care of expenses.

– Go over your parents’ investments and discuss with them. In Priya’s case, she found shares, which were in physical form, fixed deposits in six different banks and expired insurance policies. Check all investments for the mode of holding and nominees.  Consolidate investments into simple investments that are easy to manage. Looking after sickly elders, and managing work and family will take a lot of your time. Hence, keeping things simple would work best.