One of the major causes of financial troubles is not being able to prioritize goals.
We all have some financial goals. Common critical goals which are unavoidable – are retirement corpus, children’s education, and housing; and non-critical goals – world tour, luxury car, house in the mountains, etc.
Many families focus on funding goals that are sooner in time without realizing the impact on their ability to meet critical goals that are many years away.
In my interaction with many clients, I have seen parents prioritizing children’s foreign education without realizing that it is at the cost of an underfunded retirement corpus for themselves. I fully understand the sentiments. Every parent wants the best education for their children. However, one must also be aware of the fact that if it is coming at the cost of their own retirement planning, they will have to be dependent on their children and others after retirement. I am sure, many parents of today would like to remain financially independent throughout their life post-retirement.
Proper financial planning can help understand the current financial situation and the ability to meet future financial obligations. It answers some very important questions – whether you should send your children abroad for studies funded by you or through an education loan or best to find a college in India; should you buy a house now or delay it; the size of the house; should you check your discretionary expenses in order to save more, invest more aggressively in order to reach your goals comfortably.
One can always enable children’s education through an education loan, purchase a not-too-expensive house to reside in, or go on less expensive vacations but one just cannot take a loan to fund retirement corpus (the reverse mortgage process is still not popular in India and could be unsustainable in a high inflationary environment).
Thus, one should always prioritize retirement planning over all the other financial goals which can be adjusted. After all, retirement ke baad bhi sir uthake jeena hai 🙂
Compute how much you need to retire with our Free Financial Freedom Calculator as a starting point before speaking to advisors.
Originally posted on LinkedIn: www.linkedin.com/sumitduseja
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