Finance Gets Personal

When it comes to money planning, one size cannot fit all. Your income, expenses and goals all depend on your age and the stage of life you’re at. You’ll be better prepared to face the future if your financial plans change with you. Anika Mohla gets experts to customise strategies that work best for who and where you are at the moment

- Anika Mohla

IF YOU ARE UNMARRIED AND WORKING

Here’s what you have going for you in your mid-20s: the freedom to try new things with few or no dependents to account for and plenty of time on your side. Many people this age, however, have limited knowledge of personal finance, are unclear about their money goals and tend to be undisciplined with their spending. All of this hurts investment potential, but you can turn things around by doing better starting now. Let’s do this step by step.

First, cover your health: Rather than relying solely on your employer’s mediclaim policy, get a personal health cover too. It protects against co-payment loss, where the company pays only a part of your bills, or unpredictable health issues, which could either mean a higher premium or not getting a health cover at all, warns SEBI-registered wealth adviser Vinit Iyer. Life or term insurance is something you need if you have dependents or debts to pay off. Reenita Hora Malhotra, a Hong Kong-based financial journalist and co-author of Money Smart: The Indian Woman’s Guide To Managing Wealth, has a word of advice. “Insurance companies may offer you a short-term policy—one that expires in, say, 10 or 15 years—with a lower premium than a policy that lasts 20 years. It can be tempting to go for a lower premium, but the costs may not benefit you in the long run,” she says.