Hi I am 32 years old earning 1.2L per month. My husband earns 50k and has emi of 20k. We spend all our expenses include rents food petrol ,etc around 60k. For travel movie restaurants 10k. I have 10k for lic and an emi of a house 1cr for which i pay 90k every month. He has 10k lic.no much pf balance as pf is cut 1800 per month for him . I pay 10k for PF. What saving should i do for my future. Right now we are planning for kids.

Ans: Financial Planning for a Secure Future
You and your husband have a combined income of Rs 1.7 lakh per month. Your expenses are well-managed, but there's room for improvement in savings and investments.

Understanding Your Current Financial Situation
Your monthly expenses include Rs 60,000 for necessities like rent, food, and petrol. You spend Rs 10,000 on entertainment and travel. You both contribute Rs 20,000 to LIC policies and EMIs. Additionally, you have an EMI of Rs 90,000 for a house worth Rs 1 crore.

Evaluating Your Debt and Savings
Debt can be a double-edged sword. While your house EMI is a substantial commitment, it also builds equity. Your husband has an EMI of Rs 20,000, which should be managed carefully. Your LIC payments and provident fund (PF) contributions are good starting points for future savings, but they need to be supplemented.

Prioritizing Savings Over Expenses
It's crucial to prioritize savings. After accounting for all expenses, your savings seem limited. To improve this, consider the following steps:

Emergency Fund: Establish an emergency fund with at least six months' worth of living expenses. This fund provides a financial cushion in case of unexpected events.

Debt Reduction: Focus on reducing high-interest debt. If possible, refinance your home loan to a lower interest rate to reduce your monthly EMI.

Investing in Mutual Funds
Actively managed mutual funds can offer higher returns compared to traditional savings. These funds are managed by professionals who aim to outperform the market. Investing in a mix of equity and debt funds can provide both growth and stability.

Benefits of Regular Funds Through an MFD
Investing through a Mutual Fund Distributor (MFD) with a Certified Financial Planner (CFP) credential can be beneficial. Regular funds offer professional management and personalized advice, which can be invaluable for optimizing your investments.

Disadvantages of Direct Funds
Direct mutual funds have lower expense ratios but require more involvement and knowledge from the investor. Without expert guidance, you might miss opportunities or make uninformed decisions. A CFP can help tailor your investments to your specific needs and goals.

Planning for Your Child’s Future
As you plan for children, consider starting a dedicated investment plan for their education and other future needs. Child-specific investment plans can help accumulate a significant corpus over time.

Reviewing Your Insurance Coverage
Ensure you have adequate life and health insurance. With plans for a child, it’s essential to have comprehensive coverage to protect your family’s financial future.

Retirement Planning
Even though retirement might seem far off, starting early is crucial. Contributing regularly to your PF is good, but you should also consider additional retirement funds. Diversified mutual funds can be a good option for long-term growth.

Importance of Diversification
Diversification reduces risk by spreading investments across various asset classes. A mix of equity, debt, and hybrid funds can help balance risk and return.

Setting Financial Goals
Set clear financial goals for the short, medium, and long term. This could include:

Short-term: Building an emergency fund and paying off high-interest debt.
Medium-term: Saving for your child’s education and family vacations.
Long-term: Retirement planning and home ownership goals.
Automating Your Investments
Automating your savings and investments ensures consistency and discipline. Set up systematic investment plans (SIPs) for mutual funds to regularly invest a fixed amount.

Regular Review and Adjustment
Regularly review your financial plan and investments. Life circumstances and market conditions change, so your financial strategy should be flexible.

Seeking Professional Guidance
A Certified Financial Planner can provide valuable insights and personalized advice. They help you navigate complex financial decisions and ensure you stay on track to achieve your goals.

Conclusion
By prioritizing savings, diversifying investments, and seeking professional guidance, you can build a secure financial future for your family. Starting now will give you the advantage of time and the power of compounding.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in