As kids, we couldn’t wait to grow up and make our own choices. We felt that our parents had their finances in place and we often failed to understand why they didn’t spend for all the things you wanted. While a part of this impression may be because of our naivety and blissful ignorance as children, perhaps those times were different. Their challenges, their circumstances, their needs and wants, were all very different.
Today, we deal with a unique set of financial challenges. We come across expenses, obligations, and indulgences that our parents did not have to deal with.
That is why we must think beyond the investment channels and benchmarks they swore by.
Here are some situations your parents probably did not face:
1. Saving for a Longer Retirement Period
Two trends are emerging. People are living longer and retiring sooner. According to World Bank data, in 1970, the average life expectancy in India was 47 years. The number has risen to 68.6 in 2016. Thanks to the advancements in medical science, better and more accessible health care services, and increased awareness, life expectancy is only going to go up. At the same time, people are
choosing to retire sooner. Either as a lifestyle choice or due to stress-related burnout.
All in all, we are all looking at a much longer retirement period as compared to our parents. An average of 30 years at least.
This also means that unlike our parents who started planning and saving for retirement in their 40s, we need to start as early as in our 20s. The golden years will only glitter if we get to live them to the fullest, without dropping our standard of living and gracefully, without relying on anyone.
2. New-Age Health Risks
Whether one blames it on the degrading environmental conditions or one’s lifestyle and habits, there is no denying that the kind and number of new-age diseases we are exposed to today is nothing like yesteryears.
While epidemics like polio, smallpox, and plague have been almost wiped out, cardiovascular ailments, STDs, cancer and viral diseases like swine flu, dengue, and chikungunya are our country’s sad new reality. Moreover, kids these days are increasingly being diagnosed with major chronic diseases like diabetes and asthma due to a sedentary lifestyle.
The upside, however, is the increased accessibility to advanced health care. Knowing the worsening quality of life and the increasing medical costs, you need to save more for protecting yourself and your loved ones against evolving threats.
3. Expensive Education
Providing the best education to your child is like teaching him to fish. And you know what they say, give a man a fish, and you feed him for a day, teach a man to fish, and you feed him for a lifetime.
Back in the day, saving for education, at least school education, was something most parents did not need to plan or invest for. A good, government school was considered sufficient. Now, however, there are a variety of boards and getting your child enrolled in a good school is just as important and as competitive as getting admission into a good college.
Additionally, higher education now synonymous with foreign education. With the volatile Indian rupee and rising inflation, overseas education is only getting dearer. That adds another item to the list of expenses that our parents did not have to plan for.
4. New-Age Preferences and Indulgences
Nowadays, people have a stronger sense for freedom and independence. They tend to move out of their homes at an earlier age. The concept of joint families has been fast disappearing, adding outflows like rent and utilities to the lengthy list of expenses that one need to fend for.
Multiple modes of infotainment, expensive smartphones, and the 24×7 online life, are the indulgences our parents had to live without, for the most part of their lives. Phones, tablets, laptops, and e-readers as well as streaming services and music apps, are needs most people of our generation find hard to survive without.
The solution for planning and bearing these additional expenses is neither avoiding them nor pressurizing yourself to earn more immediately. Instead, making your money work for you and building a second source of income is a more sustainable way to go.
Investing smartly and being disciplined can help you save for the long-term goals and meet the financial demands of the future. Mutual funds are a great investment avenue to achieve this and IDFC Mutual Fund offers the tools to help you get there. Visit www.idfcmf.com for more details.
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