Three Stories on Why You Need a Plan #KhudKoKarBuland

Here is the story of 3 wealthymatters readers. Real names are not revealed to respect their privacy.

The first is the case of a young man in IT. His goal was to be “financially free” ASAP. His strategy was to get himself sent over to Europe by his company and leverage his increased salary to book 2 houses in India and pay EMIs on them. Unfortunately his company fell on hard times and his Europe sojourn was cut short. In fact even his old job back in India was in danger. And neither property had appreciated much in the interval.

The second is that of a young man who made a good diving as an engineer working in oil rigs round the world. Money came easily along with a sense of adventure. He believed in living it up while he was still young.He thought retirement was far away. Unfortunately he met with a accident and had to spend much time in hospital. He never fully recovered and is having to try and set himself up in another career.

The third story is that of a senior citizen. He seemed to have had children pretty late in life. So he retired from his salaried job before his son had completed his education. This gentleman had underestimated the rise in education costs nor even thought that it was possible to have his child secure admission in a college abroad.

Pity that this video didn’t come out sooner:

Thinking about things going bad is not easy. And certainly its not my case that we should dwell on negative scenarios that may never come to pass and fail to live in the present and enjoy it. However, nothing beats having a back-up plan. And no, it doesn’t always have to be an insurance policy, but quite often they have features that make them excellent vehicles to ensure financial security and the achievement of life goals, no matter what.

Its hard to predict the future ,but optimistic projections of income far into the future, especially when you need a lot of other things and people to fall in place, is likely to be misplaced optimism. Taking on debt on the basis of optimistic projections and becoming super-leveraged is taking on a huge risk of pushing oneself into crisis.

Also assuming that good health,physical and mental abilities will continue well into old age can be a major wrong assumption. Having a plan in place to deal with our human fragility and mortality helps. Having a second or multiple income sources, an alternative way of earning, savings to deal with the lean years, insurance to cover accidents, hospital stays, loss of income, etc are a good idea. In fact even home-makers and dependents had better carry some basic insurance, as their unpaid work is still likely to be contributing to the living standards of the home and it will cost a pretty penny to have some-one else do these tasks.

Lastly, as soon as a person has dependents or even a partner or better yet  anticipation of such occurrences,it makes sense to increase one’s savings and insurance cover, to ensure that no matter what happens in future, we do not fail our family and dependents. In a fast changing world, it makes sense to also check allotted savings against the current prices and options. Planning is possible but anticipating everything correctly to the last dot is not possible. Fine tuning plans is a must.

Increase your own ability to weather reverses and fulfil your responsibilities well by having a plan in place and putting aside money for various goals and purchasing the needed insurance.#KhudKoKarBuland.