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What Financial Planning You need to adopt from Your Father?

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Fathers play many firsts in your life, from being your first friend and confidante to your first financial advisor. In fact, most of us consult our father before making any serious financial decisions and investments well into our adulthood. We ask our dad various questions pertaining to investments and personal finance. For many, this is an assurance of walking on the right path to financial independence and security.

This Father’s Day you can take the opportunity to learn a little financial planning by talking to your dad about his own financial plan, including about what kind of investments for senior citizens he has made.

Here are a few financial planning steps your dad probably adopted that you can imitate, for your own financial security, this Father’s Day:

 

  • Saving a Part of the Income

 

This is one financial planning step that your dad probably taught you through his actions. You must have seen your father putting a certain percentage of his income in instruments such as fixed deposits to save for a rainy day.

Saving a part of your income helps you be disciplined with money. Ideally, you should save around 20-25% of your salary, and use the rest to fund your needs. This allows you to live within your means and accumulate wealth.

Following a Monthly Budget

Following a monthly budget is another financial planning step you’ve probably seen your dad take. After saving, you can still budget the surplus income amount to ensure that you know how much you’re using and on what.

This will let you keep track and make changes when unexpected expenses crop up. Moreover, it will also tell you where you can cut back on expenses, and the money saved through this can be put to better use by investing it in prudent financial instruments like fixed deposits (FDs).

Additionally, even if you have a credit card, you must make sure to spend only what you can repay easily. You may end up in severe credit debt affecting your credit score and ruin your chances of availing loans for things that matter, like a house or car. So, the next time you go shopping, avoid the temptation to splurge and make discretionary expenses.

  1. Ensuring Adequate Protection Through Insurance and Fixed Investments

Apart from saving his income, you probably saw your dad purchase life and health insurance to protect against financial contingencies and loss of income in case of death, disability, etc. He may also have invested his saved income into fixed assets like fixed deposits to create a corpus for emergencies.

Parking money into Bajaj Finance Fixed Deposit allows it to grow over the years, since it offers high FD interest rates of up to 8.75% with flexible tenors as against the market average. In fact, you can use an FD Maturity Calculator to find out the returns on your investments.

Additionally, you also have the option of availing pre-approved offers for personal loans, home loans, EMI finance on different products, and other financial services, from Bajaj Finserv. Doing so simplifies the process of availing financing, and helps you save time.

  1. Making Early Plans for Financial Commitments/ Goals

You may have seen your dad planning for your higher education, marriage and so on, since you were young. He may even have started making these investments as soon as you were born. This was necessary because he knew that the earlier he started, the more he would be able to accumulate, thanks to the power of compounding.

Remaining invested in mutual funds through systematic investment plans (SIP) and FDs, for the long-term helps you generate higher returns. For example, if you invest Rs.5 lakh in an FD for 5 years at an 8.40% FD interest rate, you get a maturity amount of Rs.7,57,040.

On the other hand, if the same FD has a tenor of only 3 years, the maturity amount comes to Rs.6,41,297. That is a difference of Rs.1,15,743. Additionally, FDs are highly liquid assets that can give you instant funds when required and address various short-term needs.   

  1. Reviewing Investments

You’ve probably seen your dad go back to his investments from time to time. This is another prudent financial planning step that you should adopt, because reviewing your investments periodically tells you whether you are on course with your financial goals or not. It gives you a chance to diversify your portfolio and make the most of various financial instruments available in the market.

With this knowledge, you can take the necessary steps to re-align your investments to meet your goals, and earn more from each investment as well.

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