Friday, 10 May 2013

Mother's Day. Gift Financial Security by planning

Mothers work at home and / or outside full time for our sake  and it is our duty to return  emotional security through love, affection and caring and financial security through careful planning.

Though one cannot and should not estimate the value of love and care,  it is stated that a middle class family may spend from 25000 to 300000 on children  up to say 17-20  years.  Treating this fact we may estimate a present value as Rs 10 lakhs which will give a future value of Rs. 28 lakhs which is equivalent to perpetuity of Rs 2 lakh or monthly Rs. 15000/-. i.e. She is sacrificing a pension throughout her lifetime to that extent. It would be the family's responsibility to have proper retirement planning for Mother (Parent).
The workings are given here.

Keeping  that in mind, we may suggest that mothers need to take following steps  toward greater and better financial security through proper retirement planning:
  • Form  a savings or investment  plan.  Try  to stash away more money, both for retirement and for a rainy day.
  • Arrange sufficient disability and long term health care insurance.  These risks are more prevalent among women.
  • Take more investment risks.  Women are known to be traditionally  more conservative, but they need to have their capital grow sufficiently for their longer lives through equity linked mutual funds investments etc.
  • Consider having  higher learning or adult education.  Mothers who may want to be at workplace, or are looking for  additional skills to advance their careers, should be ready to invest in additional education and training.

The above article is based on what I came across a wonderful article written by Eleanor Blayney, CFP® titled Mother’s Day Advice: Why Mothers Need Financial Security  which I thought I would share.