Planning to start a new life? Here’s how you plan your money

As published in The Telegraph on 25 January, 2017

Welcoming a baby in your family? Ensure you get these done first

A reader wrote to us about getting his finances in order before they have a baby in a year’s time. We asked the noted financial expert, Gaurav Mashruwala, to help them with a plan:


Who: A working couple, aged 31 and 28.

Income: Rs 15.5 lakh per year (jointly)

Current investments:

Mutual Fund SIP of Rs 9,500 / month

Rs 1,000 / month in PPF

Rs 10,000 / month in investments and insurance premiums

Health insurance offered by employer

Monthly expenditure:

Home loan EMI of Rs 35,000

Personal loan EMI of Rs 14,000

Utility bills of Rs 5,000

Fuel needs of Rs 3,000

Household expenses of Rs 15,000

Goals: Retirement, child education, emergencies

‘Well begun is half done’

The couple has the right attitude towards money. They started on the right note by purchasing a house first, going for term plan and regularly contributing to PPF and Mutual Fund SIPs. After all, the 20s and the 30s are the Golden years for saving. Any couple that remains focused like this will definitely achieve most of their financial goals with ease.

Here’s what they need to do:

Contingency Fund:

Keep aside money for three month’s expenses — about Rs 2.25 lakh for emergencies.

You may build this up over a period of next 6 months.

Keep 10 day’s reserve in cash at home.

The rest can be in Liquid Funds or Bank deposits.

Life Insurance:

Please reduce or modify investment-oriented insurance policies. Ensure no additional premium is spent on these policies.

Purchase Rs 50-lakh term insurance cover for both husband and wife over and above the existing ones.

Loan Repayment:

With interest rates falling, opt to lower your loan tenure by paying the same EMI amount.

Pay off home loans whenever you receive bonuses and increments.

Try and be debt-free in the next 5 years.

Planning for financial goals:

Retirement Corpus:

Continue contribution to PPF and also to EPF.

Also, make a yearly contribution of Rs 50,000 to NPS.

Next, start investing in Mid/Large-cap Funds every month.

Later, invest in International Equity Funds to diversify your portfolio across countries/currencies.

Child Education Fund:

Existing monthly investment in MFs should be ear-marked for this financial goal.

Ensure it is in Large-cap Equity Funds.

Once you are debt-free, start investing the current EMI amount of Rs 49,000 in a Dynamic Equity Fund through SIP.

Also, start a small SIP in a Gold Fund for diversification.

If you have a girl child, invest in the Sukanya Samrudhhi Scheme.

Medical Corpus:

Earmark your current FD investments for medical emergency.

If you require more money, then create another medical emergency fund.

This can be done after the main emergency fund has been created.

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