During the lockdown, you were probably consumed with the thought of when it would end and you can get back to your normal life. The month of July is seeing the first signs of hope for India as the government eases countrywide lockdown and slowly restarts the economy. Now, is the time when your journey towards adapting to the new normal starts. All of us are making adjustments to our daily routines to help us transition back to life after quarantine. Along with the changes to your daily routine its advisable to rethink about your approach towards the finances so that you are on- track to fulfil your goals.
To be able to fulfil your goals, you will need a robust financial plan in place that is crisis- proof. Lets see what kind of goals and dreams am I talking about – Do you want to build a house for your parents? Do you aspire to send your kids to a foreign university for their higher education? Do you wish to retire at the age of 50 and have a comfortable life post-retirement? These may be your short, mid and long term life goals but are you sure how you are going to fund them? The answer is quite simple you need to start saving. However, you need to be smart about your saving avenues and ensure you undertake a goal-based savings approach.
Heres how you can strategize for your goal-based savings to be able to bounce back from any financial roadblock in the future.
1. Set S.M.A.R.T. goals
S.M.A.R.T. stands for Specific, Measurable, Achievable, Realistic and Timebound.
Always remember that your life goals will be different from those that your friend have. Life situations vary and no two families are the same. You end up with your own set of of responsibilities.
So, you need to identify your goal and then make it S.M.A.R.T. For example, your financial goal could be your kids education.
But you need to make it Specific, Measurable, Achievable, Realistic and Time-bound by making it child education expenses of Rs. 25 lakhs after 10 years. By this statement you will be able to define it in terms of the type of expense, the amount to be spend and that it is achievable with a time period.
2. Create more than one revenue stream
Having just one income source in this day and age could put you in a difficult spot during uncertain times. As of now, job security is at an all-time low due to the ongoing pandemic. In fact, a survey conducted on the impact of COVID- 19 on jobs showed that of the 3074 respondents, nearly 40% are currently facing a salary reduction.
To deal with the concerns of a possible salary cut its advisable to have a contingency plan in place. If you do not have time to work multiple jobs, there are financial tools you can use to earn a passive income while earning from your daily job. From my experience, ICICI Pru Lakshya LifeLong Income is a plan that provides the dual benefit of life cover and savings at affordable premiums and a comfortable guaranteed monthly income. This becomes one added stream of revenue that can come in handy during times of need.
3. Save at least 30% of your income
The pandemic has taught us that savings as a habit is indispensable. Your financial goals can be easily achieved by planning how you will save your money right now. Goal-based saving is one of the best ways to achieve your future dreams whether it be a new house, car, vacation, or for a comfortable retirement. A thumb rule is to put away at least 30% of their earnings into financial assets such as fixed deposits, life insurance and government bonds that will benefit one in the long term. Using saving-oriented financial tools as a way to invest your money helps you to get adequate returns with the help of compound interest. This way your income is not sitting idle.
4. Review your Investments, Goals and re-align the same
A very important step in your Financial Planning is called the Review. This needs to be in line with your asset allocation and risk appetite.
Only when you Re-look your portfolio, you would be able to analyse the same and check if your portfolio is following the desired path. If not, then a re-alignment of the portfolio might be necessary.
Also, goals evolve and change with time. Review and analysis of your investments can be a healthy check on the progress of the same so that there is no shortfall when the goal is near.
5. Secure your familys future
The pandemic has woken many of us up to the possibility that, at any time, we might leave our financially dependent loved ones without any support. In such scenarios a financial instrument like life insurance serves the purpose of securing the future of your loved ones from any uncertainties. With affordable premiums paid towards a policy, you receive a guaranteed maturity benefit to fulfil your goals and a life cover to secure your familys future from uncertainties.
Out of the host life insurance plans out there, ICICI Pru Lakshya Lifelong Income plan fits the above mentioned need perfectly. As the name suggests, this plan offers a guaranteed income from the income start date of your policy which is the fifth policy anniversary after the premium payment term until your 99th birthday! The plan also provides a comprehensive life cover in case of an unfortunate event. As per the prevailing tax laws, you also get the advantage of tax benefits on both your premiums paid as well as the maturity benefit received from this plan. In addition to its benefits the plan also comes with the long standing reputation of a stable brand like ICICI Prudential Life giving you the peace of mind in times of need.
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