Financial planning must be begun as soon as you get married

Mrs radha Iyer watched from the bench her husband swing and perfect a put on the golf course. Her thoughts went back 32 years when they had just come back from an exciting honeymoon. Her father-in-law sat them down and had a chat that changed their life or should we say, put their life on track.

Both Raghu Iyer and Radha had been class mates at IIM Calcutta and had married couple of years after they had passed out. They had high flying corporate jobs and were earning handsome salaries. Their background and the position required them to maintain a certain standard of living and they did. Young, enthusiastic and full of energy they were the work hard, party hard type of people and loved it that way.

Raghu had an inkling as to what his father was about to say that evening. His father was a disciplined man and had a certain way with everything. Now, he would ask them to take stock and live a more sober life which meant cutting down on their wardrobe spending, lesser partying, they will have to travel economy and avoid going on a shopping sprees on impulse. This whole planning for the rainy day thing was boring and budgeting was something they hated to do. Actually, Raghu did not know of a single person who loved budgeting.

That evening, Raghu's father told them just one thing — live life king size then and now.  Initially for the first few months it was a bit tough, but things started falling in place quickly. Then came the children — twins — and Radha was forced to quit working full time. This was a conscious decision; However, it did impact their cash flows. But they still went ahead and bought the house they had identified and upgraded their Maruti 800. Their annual vacations were sacrosanct and it provided both the Iyers and the children exposure to different parts of the world.

Relatives and friends envied them but sniggered with the thought that with this kind of lifestyle, the Iyers would have to compromise on their retirement savings and would be reduced to be dependents on their children when they grow older.

The children did well and went abroad. Raghu retired early at 55, took up the cause of rural education and nurtures his passion for golf. The Iyers are well settled and would comfortably see through their twilight years in each other's company. Relatives and friends are still envious of them.

The Iyers had taken their father’s advice seriously and saw to it that their and the children’s future was well taken care of. Radha smiled at the thought of her father-in-laws words that defining moment. It sounded ridiculously simple then but now it seems profound. “Religiously put aside 30 per cent of your earnings into carefully chosen investments. Spend the rest of the money, the way you want”.

It was so simply said, yet the Iyers decided to carefully implement it.

The Iyers had a simple formula — If they earned Rs 100 whether Raghu's salary.  Radha’s freelance income Rs 30 went towards investments. Of this, Rs 10 went to long term saving, Rs10 went to short term (1-2 years) needs and Rs 10 went to build an emergency corpus.

After a couple of years they had created an emergency corpus which enabled them to start investing that Rs10 for their children. They adjusted their life around living with Rs 70 per cent. The short term investments provided for their holidays and the children had a reasonable sum in their acc-ounts when they went to college. Of course a student loan was inevitable but that was still fine.

(The writer is the CEO of Bankbazaar.com)