Planning finances in the era of financial crisis -part 1

 

PLANNING FINANCES IN THE ERA OF EMPLOYMENT CRISIS – PART 1

Financial Planning and You: Taking steps towards better economic security.

In times where security from a lifetime employment is on a decline and having a well formulated career path is difficult due to increasing contractual employment in cities, there is an increasing need to manage your funds for self-sustenance. If you have undergone any of these phases of life, here is an antidote for you on how to manage your funds.

Have a plan, be rich.

Having a plan in place beforehand and sticking to it as closely as possible can help to ensure that you survive the transition with the least stress possible.

Money is important, not only because of its utility, but also emotionally. Living a happy, healthy and successful life is achievable only if personal finance is managed adequately.

What should students know about financial planning?

One of the first and most important steps for successfully managing money as a student is to budget expenses. It means you should truly understand your expenses. Budgeting can help you manage the harsh reality of limited availability of money.

1)     A simple start can be by making a list of your monthly fixed expenses. Further,

2)     by opening a sweep-in account, you can gain higher interest on the money that you receive from their parents.

3)     Availing benefits of various scholarships sponsored by state and centre under various categories to sponsor their education.

4)     For a girl child there are schools and training centres where they can get trained for free.

5)     Moreover, you can learn a lot to learn from your parents through observations and participation in financial decisions.

6)     If your education expenses are bore by your parents or may be partly by the education loan, then you should probably analyse whether such an education really matters or an inexpensive school or college which can help you save on loans and interest would suffice.

 Sooner or later, you will have to bear the expenses of life. Taking education as a step to learn managing funds can lead you to a successful working life. Certain decisions may be emotionally tough initially, but their outcome shall surely be positive in the later life.

Life in job and thereafter:

Today’s job often demand being skilful in multiple fields, moreover the seasonal jobs may leave you unemployed at times. Such situations might be stressful to manage the consistency in lifestyle. Although a job can permit you to have funds at your disposal, the change in marital status, retiring parents, health issues, can probably pose a new challenge to manage your personal finance.

There are some ways to tackle this issue, to save and to invest. There are various investment options available such as

1) Kisan Vikas Patra,

2) Sweep-in account,

3)Public Provident fund,

4)Money-back schemes by various insurance policies.

 You may choose any of them as per your convenience. Forming an emergency fund can even help you in the times of unemployment.  It's never too late to begin saving an emergency fund, no matter how small the amount is it can add up to a significant eventually, thanks to the effect of compounding interest.

As you begin to have dependents it’s better to insure yourself of any financial shocks in case there are any health issues.  

5) By registering yourselves into Employee State Insurance scheme, you can not only avail a number of medical and hospitalization benefits , but also an unemployment allowance in case of retrenchment, closure or disability. Further it also gives you an opportunity to enrol for vocational skill up gradation scheme which can help you enhance your scope of employment. 6) Alternatively, you can avail the benefits of the Rashtriya Swasthya Bima Yojana / AYUSH scheme (RSBY), a health insurance scheme for those families who live below poverty line families.

Saving and investing a proportion of this money for the future can open up a world of possibilities bringing greater financial security and independence.

Should you plan for retirement?

A good pension plan can help you to reap the benefits of our working lives. You can avail the benefits of the old age pension scheme where the Government of India, pays Rs. 500 a month is given to persons who live below poverty line. To avail better options, you may choose to contribute Rs 200/- yearly in the scheme run by LIC of India, known as Aam Admi Bima Yojana, to avail a handsome pension amount. As you get an added life insurance you need not worry about dependents on your unfortunate death. Alternatively, if you are a self-employed artisans, masons or a painter, schemes such as the ‘Dilli Swavlamban Yojana’ in Delhi, can ensure you pension benefits.

What if things do not go so smoothly? How would you avoid hard times? To know the answers check out our second blog.