How A Simple Question Made Me Relook At My Financial Situation.
The 6 questions you need to answer to know if you have a financial plan in place.
I have been working in the corporate world for close to 2 decades. I have a decent educational background and then a reasonable career. But throughout all of this, I never learnt about personal financial planning. As I have subsequently discovered, I was no different, most people around me are in the same boat. Regular education and workplaces do not equip us with this skill, at all.
About 4 years ago, I was catching up with a batchmate who is a founder of a private equity investment company. He was raising a fresh round of funding for his firm. Being a little enthusiastic, I asked him for the details to become an investor. We discussed a few other things such as the type of company their firm invests in and who some of their other investors are etc.
Then, just as we were bidding adieu, he innocuously asked, “you have done your financial planning, right ?!”. I nodded automatically, “of course”.
But that simple parting question actually set me thinking. I asked myself if I had really done my financial planning and the honest answer was “No”.
Now, I am able to point to that simple question and state with certainty that it was the turning point for me.
I then invested real effort in understanding the basics of personal financial planning, I started talking to people around me, but mostly I read. I read blogs and books. I also listened to several podcasts. 4 years down the road I can confidently state that I know my financial health and I have a plan in place. In fact, I am now confident enough to write about it!
In the course of these 4 years I have spoken to a number of my peers and have reached the conclusion that many people, irrespective of workplace and education, do not have a personal financial plan. This conclusion has also given me the impetus to start communicating (via blogs like this) to more and more people about the basics and why it is important.
So, dear reader, my question to you is the same one, “have you completed your financial planning ?”.
And if like me you automatically nodded, “of course”, then let me be more detailed with the following questions.
Q1. Do you know how to calculate your net worth and what it is today?
Q2. Have you got Term Insurance in place? (pure and simple term insurance, if you die your family gets the money if you live your family gets You)
Q3. Have you got medical insurance over and above your employer-provided insurance?
Q4. Do you have enough money for living expenses, readily available (Liquid), emergency funds, in case you are not able to earn for the next 6–9 months?
Q5. Do you know how much money you will need post-retirement to continue living comfortably?
Q6. Do you have a plan to invest the required sum to get to your retirement lifestyle, whenever that comes up?
If you answered anything other than an emphatic ‘Yes’ to all of these 6 questions then, dear reader, you need to buckle down and get your financial planning sorted.
There are many resources out there and you will need to decide what path you want to follow, but you need to start now !!
You can also start by reading up the very basics.
