“As a family, we jointly decide our financial goals and how to achieve them,” says Radhika Desai, a Thane housewife. “Ever since it has been made a family activity, everybody is enjoying it. They feel committed and want to participate. There is a lot of fun in the whole exercise, ”Ms. Desai said.
Jointly done, there is a sense of commitment and also empowerment. Everyone has a say in this. Take the views of children. Make them feel included. It is a life skill.
During my quarterly review, with the permission of my clients Jahnavi and Rohit, I allowed my young daughter to join us.
How to manage money
I still remember my client’s words: “Sana you are lucky that your father is letting you participate. Managing finance is a life skill. For years, I ignored your father’s advice and saved my daughters from finances. My reasoning was, let them focus on their studies and career. Today both my daughters are very well qualified and have a wonderful career. They know how to make money, but they do not know how to manage money. “
As a professional, I have always maintained that “no person can ever be rich.” Individuals become rich only by managing wealth. To make money, a person must be brilliant in their business, for managing money, different skills are required. “
Financial planning is not about finance. Over the years, as a financial planner, I have realized that financial planning is not about numbers. It is about human emotions. Financial targets are not numbers; They are events that are seen by everyone in the family.
Is the daughter’s marriage a financial goal, dependent on a number or the necessary amount of money, or is it an emotion-laden event? There was an advertisement which had the tagline “The happiest day of the father and the saddest day of life is the same,” and then in reality the daughter’s wedding was shown.
Feelings vs number
The same is true for a child’s education, home purchase and retirement. There are a lot of emotions behind all the milestone events in our lives.
When these are converted into numbers, it is like a flower describing its specifications such as its weight, height, width, shade of color, and number of thorns. The beauty of the flower is lost only once it has been converted into numbers.
We blame financial planners for converting financial goals to dry numbers. It feels like this conversation between a financial planner and a client.
Financial planner: Sir, we have worked on three scenarios based on the need to plan your daughter’s wedding. Worst case, middle case and best case. It is based on the rate of return, inflation, prevailing tax.
Worst case, you will accumulate enough money till the stage of ‘Baaraat’ coming to your door after which you will not be able to fund the function. The middle case is that you will be able to fund the first two ‘phasers’, after which you will run out of money.
Customer: What is the best case scenario?
Financial planner: Sir, the best case is that you will have enough money to complete the wedding, but there will be no money left for the ‘farewell’ ceremony of your daughter.
Strategic together
If the financial goals are the feelings of the whole family, then the strategy to achieve them should also be a family activity. Let everyone participate. Sit together and discuss the goal. Plan that event.
The planning part should include finance. If the whole family has to participate in planning the wedding in the family, let the financial aspects also be jointly planned.
Once this is done, find out how those funds will be generated. Will it be from maturing that year’s income or some investment, will the family have to borrow? There may be a situation where there is likely to be a goal in the future and hence the family decides to make a strategic investment well in advance. There is a possibility that the family may have to cover some expenses or indulgence. Even if this happens, their commitment to that strategy will be very high.
Priorities are clear
“Gaurav, I don’t have to change my handset anymore, I can easily postpone it for six months, let us first focus on financing Deepti’s education,” says Mrs Sharma. Once we have accumulated enough funds, I will feel relieved. Maybe later I will buy a high-end model. “
Next time you think of FDI, think of ‘My FDI – My Family’s Investment Decision’. It has a greater impact on your life than the amount of money that flows through FDI in the economy.
(The author is the financial planner and author of Yogic Wealth)
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