When Wing Commander AK Singh (name changed), a serving Air Force officer, approached us for preparing his financial plan, it was clear to us that his expectations of sending two children to an expensive boarding school in the next three years while still in the process of acquiring a flat for his family, two office spaces for investment, paying for eight insurance policies with yearly premium of Rs 2.22 Lakhs and still planning to take VRS four years later, all from his Govt salary earnings, were not realistic. Fortunately, his wife was associated with the financial planning process right from the beginning and was instrumental in moderating the expectations. She had her reservations about many of the goals they were pursuing but was keen herself too about the boarding school for children.
Their financials did not support their requirements. Their household expenses were high, there was large outgo into insurance products not suitable for them, monthly savings were almost entirely into fixed income products which were not tax and inflation beating, and net monthly cashflow was negative. However, since both of them were deeply committed to getting an implementable roadmap made for their lifetime, it was much easier for us to tone down their expectations, get them to offload unsuitable products they had subscribed to, and rework correct priorities for their financial goals. In fact, making their financial plan was much easier for us than for many other families with better financials due to the active involvement of both the husband and the wife in the process.
It is a common experience of all the Financial Planners that the first data inputs for preparing a financial plan for a family come almost entirely from the husband. Somehow, it is taken for granted that the wife should not involve herself in financial matters in a family. However, after we insist in involving the wife too, the results almost always are pleasantly surprising. Inputs like household expenses, listing out of the goals and their inter-se priorities, timeframes of financial goals, etc are more realistic. Many lofty goals listed earlier may go out of the window and new practical ones edge in.
Generally speaking, wives can provide many inputs that the husband would miss out on or just gloss over. While men are better at costing and long-term visualising, women know the preferences and requirements of children, and the family as a whole, much better. Thus, the two combined can vastly improve the financial plan inputs and planning process. Another advantage is that when both the partners become stake-holders in the plan, its execution and longevity is almost assured. Conversely, a financial plan made in isolation may face resistance from the spouse and have limited chances of success. When the plan is a team effort, both would ensure that there is healthy spending, savings goals are adhered to, financial products are jointly analysed before being subscribed to and uncalled for diversions are minimised. In fact, if the grown up children are also involved in such financial planning, they make the goal-achievement task of their parents much easier, apart from learning valuable financial lessons for their lifetime. There is another angle to it too. If unfortunately something happens to one of the spouse, the surviving members of the family would try and stick to the plan as far as possible not only because they are aware of its nitty-gritty and logic, but also due to emotional reasons. Thus the adage, that team effort is always better than a lone effort, holds true in financial planning in a family too very well.
Col (Retd) Sanjeev Govila, CFPCM,
CEO, Hum Fauji Initiatives
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