Couple Goal: Always keep your finances under control

On November 8, 2016, at around 4.30 pm, Anandbhai had withdrawn Rs 1.5 lakh in cash from his bank account. daughter needed money arangetram (or the first solo performance of a Bharatanatyam artist) on 10 November.

After the event, all the musicians, make-up artists and others were to be paid.

The family was really excited as their daughter Payal was working really hard for the past 6 months and of course, after years of practice.

However, things took a different turn when Prime Minister Narendra Modi announced a ban on ₹500 and ₹1,000 notes at around 8 pm.

external exposure

In Anandbhai’s case, some musicians had accepted payment by cheque, the make-up artist was willing to wait for a few days, while the bank manager held some notes of smaller denominations for them on the morning of 10 November.

This is an example of external event risk. Even after all the planning, things can go wrong.

internal risk

Now, let’s look at another example of an incident that disrupted the life of a customer’s family. Shraddha, her husband Sameer and their two sons belonged to a small, happy, middle-class family. Sameer had a secure job. Shraddha was a homemaker whose energy was spent raising Sameer (10) and Amit (7). They were living in a remote suburb of Mumbai. Along with his secure job, Sameer had regularly invested in SIPs of a mutual fund; He also had two term plans and a well-diversified investment portfolio. Other aspects of his finances were also well taken care of. The family lived within their means.

One Friday evening, when Sameer was returning from Pune after a business meeting, his car met with an accident on the Mumbai-Pune Expressway. He died on the spot. Shraddha and her sons were feeling completely lost and depressed. It’s been seven years since then. Shraddha and her sons are yet to receive the news of Sameer’s demise. His financial condition is now back on track. This is a classic example of internal event risk.

In both of the above examples, as a financial planner, I could offer a few strategies for mitigating financial turmoil, but let me be honest: at the end of the day, something is called an ‘act of God’ or Such a situation is said to be beyond our control such as a tsunami or a flood.

The COVID-19 induced lockdowns were external and despite proper planning, nothing could be done to mitigate the impact. Shruti lost her job, Kirit got a pay cut during the lockdown. He had an outstanding home loan; Apart from this, he also had to bear the cost of his daughter’s higher education.

Fortunately, he had set aside a contingency fund with which he could manage the situation for some time. However, this may not always be possible.

Many years ago, when Mumbai was hit by heavy rains, ATM machines were submerged in water and people who needed emergency funds could not reach them.

It is important to have a holistic approach in such situations. Obviously, it’s easier said than done.

Over the years, as a practicing financial planner, columnist, and guest on TV shows, I have recommended regular reviews of one’s financial situation. This exercise should be done jointly with the spouse.

review your finances

Spend about 2-3 hours every quarter on jointly reviewing your finances – only about 8-12 hours a year. I call it the ‘go to financial date’. On these ‘financial dates’, discuss income, expenses, status of various investments, debt (if any), where and how various financial documents are filed and stored. Update your address regularly with service providers wherever necessary.

Also, if there are any financial goals coming up in the next quarter, plan where the funds will come from.

There will be events that will happen suddenly. There is no way to control them, but the general experience is that couples who are regularly reviewing their finances and have a more complete picture of their financial situation will be able to deal with upsetting events more effectively. .

(The author is a Financial Planner and author of Yogic Wealth)