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6 common financial worries
Don't just waste time thinking about them. Try to find solutions.
Let me list them, as I hear it:
1. Huge debt combined with job insecurity:
Whenever a young person takes a loan somebody in the family is bound to say 'OMG you are taking a Rs 18 lakh loan (it could be anything from Rs 5 lakh to Rs 450 lakh!) – I took only Rs 1.5 lakh in my times. Actually this is not the right way to look at a loan.
If your father was earning Rs 15,000 a month (Rs 180,000 per annum) and took a Rs 5.5 lakh loan to buy a house, he was taking a 3 year CTC as a loan.
If you and your spouse are earning Rs 1.5 lakh per month (Rs 18 lakh per annum) and you take a Rs 55 lakh loan for buying a house, you are also taking a 3 year CTC as a loan.
Most people are comfortable while taking the loan. However, the risk is if you are over paid (I mean if your next employer will pay you only half of your current salary, then there is something to worry about. This may be difficult to believe, but in a world with changing technologies, skill requirements, negative appraisals people should be ready for a 10-20 per cent salary cuts during difficult times.
2. Children's education expenses
It is clearly a very big worry. My take is the worry is simply because they think that the education is their responsibility and they should pay for it. So no father will say 'I have already spent Rs 10 lakh on your degree' -- they will be willing to spend Rs 30 lakh on their next education degree also.
Amazing parents who are willing to compromise on their own standard of living -- and think that this education will take them to stratosphere. All the best. No simple solutions. Live within your means, and let your kids borrow.
3. Worrying about unexpected health expenses
Almost everybody I meet is extremely worried about health expenses. They will rattle off names of friends who spent anything from Rs 4 lakh to Rs 100 lakh while treating their family members/ friends etc.
Sure, get yourself insured! But a far more important solution is to get yourself into a fit condition. From today. Sorry. Now!
4. Overspending
More true for the younger kids. Absolutely no control on their phones, and other gizmos. Earning Rs 20k a month and willing to spend Rs 30k on a mobile (Subra Sir it has a camera, music, ...etc.). Hmmm no comments again.
More true for the younger kids. Absolutely no control on their phones, and other gizmos. Earning Rs 20k a month and willing to spend Rs 30k on a mobile (Subra Sir it has a camera, music, ...etc.). Hmmm no comments again.
5. Paying for parents' old age
This can be scary if your parents has not provided for it themselves. If a parent lives till the age of 90 (common these days), and you are the only son, chances are 15 years into your retirement you are still paying for your parents' expenses. This is not just scary, it is nightmarish.
6. Your retirement corpus
You have no clue how much you require -- but do it mid afternoon. If you do it in the night, you may not wake up alive. It is damn scary.
This can be scary if your parents has not provided for it themselves. If a parent lives till the age of 90 (common these days), and you are the only son, chances are 15 years into your retirement you are still paying for your parents' expenses. This is not just scary, it is nightmarish.