As young adults most of us aim to earn more and more money while we can so that we can fulfill our dream of lounging in our vacation home (or any other dream that you may harbor) when we are older without any worries of the world. But things rarely go as planned. Life has a knack of showing us things we never expected. Let us look at some of the surprises that life might throw at us in our mid-life which might impact your financial plans, so that you are ready to face them head on.
1) Ageing parents
As your parents age their chances of falling ill also increases. Their illness might reach a point that either you or your spouse will have to take a break from their jobs or hire a caretaker to look after them. In any case it will put additional strain on your finances. Saving for ageing parents is something we do not normally consider while making our financial plans. This can throw your budget off balance.
2) Expenses of your adult child
Nowadays higher education has become a norm and a necessity. This means that you may have to support their educational expenses till they are in their mid or late 20s. Your child may also suffer from job loss, long term illness or other such setbacks. You may also require a handsome amount for their weddings as we Indians love a big fat celebration.
3) Low retirement corpus
Most of us lack sound knowledge of investment. We also do not take inflation into consideration while saving for future. This puts us at risk of either starting financial planning too late, making bad investment decisions or not investing enough. As a result when your retirement is approaching you may realise that you do not have enough corpus to lead a happy retired life.
4) Health cover
Very few people in India have adequate health cover even as medical expenses are on the rise. If you are one of them, any health hazard to you or your family member may make a huge dent on your finances. Blood pressure, diabetes, stress and other such ailments are very common among those in their 40s and 50s. Besides health cover does not cover all the medical expenses.
5) Loss of spouse
Loss of spouse, whether earning member or not, whether due to divorce or death, is not only emotionally draining, it can also cause a major lifestyle change and affect your financial resources. Most couples share financial responsibilities and you may notice significant rise in your expense as an after effect of their loss.
What you can do to ready yourself for such surprises
One of the best ways is to start investing early and linking each investment to a particular financial goal. Also keep increasing your investment in proportion to the increase in your income. Make sure to have health and life cover for you and your family. Keep an active track on your budget to avoid unnecessary expenses. Do not forget to save enough for your retirement.
Unforeseen events may still arise but these steps can help to reduce its impact.
His interests include cooking & gardening. When he is not cooking or gardening, he is writing.