I know this is a tough nut to crack but let’s try. If you were asked which were the top 3 financial aspirations in your life, what would they be ?
The answer depends on people to people and obviously it cannot be the same for all. It depends on where the person is placed in his life financially; how many goals he has already saved for; what goals are more important for him and other factors. A goal here means an aspiration you want to achieve.
But still, if I insist that each one of you reading this were to jot down realistically what would be your top 3 goals in life, what would they be?
Retirement should be a top priority goal
I personally think that retirement should be one of the most important goals in a person’s life. In today’s world where in India, children are moving out of their homes for studies and jobs, the probability that they will be around to support their parents post-retirement is very low.
There were days when the joint family system worked perfectly well and it still does but the concept is now decreasing rapidly. Our kids are going through a metamorphosis by adapting the culture of the Western countries and are taking to it so fast that it leaves quite a few of us breathless.
So start with a worst case scenario of not expecting your children to help you with your retirement either financially or emotionally. And then prepare to save for it.
What you don’t want is get to retirement and realize that you have taken care of all the other goals in your life but now don’t have the money to survive your heydays. At this point of time, there is no time left for you to earn any money. Time has run out and you need the retirement corpus ! So ensure that this is something which you look at meticulously during your pre-retirement years.
I would make this one of the most important goals of my life and save for it.
Children’s Education but not marriage
Every parent wants to educate their children and pay for their marriage. And almost all of them put equal importance to both of these future goals.
But I think education is more important that marriage. If you save a decent sum of money for your child and get him into the right stream of education, he will be a bright student and land himself a job that can help him pay for his marriage.
A Parent who compromises on education costs because he has to save for his child’s marriage isn’t necessarily doing the wrong thing but isn’t doing it right either.
There could be a very thin line you want to draw between these two aspirations that you have but between both of them, I personally think education holds more importance than marriage.
The education you give to your child will form the base of the pyramid of his future and I think it should not be compromised upon because his marriage is your onus !
A house under your head
Roti, kapdaa, makaan aur ek mobile ! That is the mantra these days but the makaan still stands out.
A house under your head is a very important investment. The famous Peter Lynch said that the first investment a person should make is invest in his house. He can then look to park his money into other investment products.
A house to stay in builds an asset for a person but it is important to remember that essentially it’s a liability. You pay for it via a home loan and spend money on it’s maintenance. Statistics suggest that the average Indian closes down a home loan in 8 years. That is a long time to carry a liability.
But having a house could potentially be better than not having one, in the latter case you have to rent out a roof under your head. A house also means you are building up on your personal networth. Emotionally too, it adds to a person’s social upliftment and well being.
Saving money to pay for the down-payment of a house is an important activity especially for the middle class investor. This would be my third important goal.
Recap
These would be my top 3 financial goals if I were to start from scratch in my life today. Note that I have assumed here that you have provided for all the risk mitigation by taking the right insurance policies – if you don’t do that then you run the risk of hauling out money from your savings meant for these top goals.
What are your goals that you consider important ?