You Can Do It – Take Care

As a financial planning company dealing primarily with armed forces offices and their relatives, we often come across officers’ wives who have lost their brave husbands in battle and conflict zones, or otherwise. The ladiesare at a severe loss on how to pick up the threads of life, after having overcome the initial shock and trying to come to terms with realities of life especially with regard to their children. While there is an excellent support structure – emotional and physical – available in the services, there is a serious dearth of informed financial advice available to them. Most of the financial advice that comes to them is given either by people who are themselves not clear about the best choices for them or by those who have some ulterior motives.

Peculiarities of most of such affected families and ladies are:-

• There is large amount of money that suddenly becomes available to them.However, most of the ladies have never handled money in the past to the extent that they may not even be clear about normal financial transactions like operating a bank account or maintaining basic accounts of own financial dealings.
• Children are normally studying and could be very young.
• They prefer to turn to their friends and relatives even if they do not have much faith in their financial skills.There is a trust deficit in financial advisors and ladies are either wary of approaching them or do not know who can help them out.
• Safety of capital and a very high level of liquidity is always the highest priority rather than planning for the life’s financial goals.

Based on our experience of handling many such cases, we have given below some suggestions of how such ladies should go about their financial management so as to get back a positive control of their lives at such a juncture:-

1. Preparation of Personal Will – extremely important and the very first priority. Should be registered in a court. Appointment of a good executor in the Will is very important.
2. Take Adequate Term Insurance –term insurance as per their future requirements, primarily relating to their children, is another imperative. Insurance of home loans, house properties, car and other important assets are also equally important.
3. List out future major requirements along with their current costs. These requirements, in most of the cases, are likely to be children’s education (graduation and post-graduation), their marriage, purchase of a house or payment of existing home loan instalments, own retirement living, vacations, change of car periodically, etc. The current costs are to be increased realistically by a yearly compounded inflation rate till the requirements are likely to occur so as to get an idea on what will those requirements cost when they actually come up.
4. Try and figure out whether your savings will match up to those figures, taking into account your increased incomes and expenses over the years. See if the equation Income – Expenses = Savings can be changed to Income – Savings = Expenses, since keeping expenses in check and meeting your future obligations will be crucial for you.
5. Invest the large compensation amounts received very carefully. Few rules of thumb – keep emotions out of investing; invest as per your financial goal requirements within your risk comfort zone;requirements occurring in next 2-3 years go into safer debt investments while longer term requirements should go into equity related investments; tendency to go in only for ‘safe’ investmentscould be detrimental to your future requirements; Real estate and Gold should be taken only on as-required and if-required basis; And insurance as an investment should be totally avoided.
6. Take unbiased and professional advice if you feel to since it could make a lot of difference to your family’s future.

Last but not the least, your own confidence, Will and steely resolve to deal with the turbulence of immediate phase of life is what will ensure that you survive the ordeal for the sake of your children, your other near-and-dear ones and your own self.