May 29, 2013,12.06 IST
Are you planning to be wealthy or poorer
Why should you worry today than repent later?
The socio-economic conditions in India have transformed drastically in the past few years. The tradition of joint families made way to nuclear families due to which we can no longer rely on the safety net of joint families for our financial needs. Middle income salaried professionals form the core of India’s Population. There are nearly 73 million of us which fall in this segment. Our standard of living has been affected by high inflation rates over the past decade. Apart from the core inflation numbers, the inflation rate for child care and education have also sky rocketed. The cost of medical care too has been on a steady raise. Private sector has become a major player in India’s job market as opposed to the public sector. This means that we no longer have pensions and other retirement benefits usually associated with the public sector. Given all this, it is necessary that we make the appropriate financial decisions and lifestyle choices that will have a lasting impact on the future of our financial well-being.
Our financial Habits are mainly reactive:
We get so pre-occupied with our daily routine that we often overlook the importance of our future financial needs. Middle income salaried professionals typically follow a similar pattern in making financial decisions. One pattern we follow is to postpone major financial decisions until we are faced with an emergency. Additionally most of our financial decisions are taken in a random manner rather than following a systematic and planned approach. Our approach to personal finance is largely reactive in nature. At a young age we rely on loans or other form of credit to fulfill our dreams of owning a car, home and even an expensive mobile device. During the peak earnings phase, we generally tend to pay off these debts and prepare ourselves to cover the expenses related to our children’s education. This is also the time when most of us start planning for our retirement. Given this behavior it is not surprising that majority of the middle income professionals are not financially ready for the future.
Planning ahead and early is the only solution:
Moving to a pro-active approach about personal finance is the only way to ensure that we all are financially ready. Planning ahead and saving for the future will ensure that we reach most of our future goals. Today, the salaried professionals are expected to make more financial decisions than ever before. We are being presented with a gamut of financial products for every aspect of our daily life, be it bank account, credit card, loans, insurance or retirement solutions. Analyzing the available financial products and choosing the one that suits our needs is a common challenge most of us face. A systematic and scientific approach to managing our personal finances can help us in channelizing our savings towards achieving our goals.
Most of our personal financial decisions are taken in isolation and without professional advice. It is important that we change this and make personal finance decision making a continuous process. Additionally, it is necessary that we look beyond the short term goals and instead start preparing ourselves for long term goals. If we do not make this paradigm shift, the result of current personal financial habits could be catastrophic. Let us start while we still have time on our side.
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