The very nature of the word ‘Future’ talks of uncertainty
and possibility. I sometimes wonder if future and outer space are actually
expressions of the same quantity. (No, I’m yet to see Intergalactic) Both are not
limited by the bounds of time, speed, surrounding conditions and possibilities
of certain things happening, when and why they would happen, and the severity
are all unknown quantities. Practically, future is all but a set of
speculations and theories based on what we have learnt over the years about
people and the space.
So are we bothered by and prepared what the future holds? It
might be a thought we should spare a moment on amidst all the happy-go-jolly, live-for-the-day
and chill-pill ideas people today ride on. It is definitely not worth ignoring
in an era where most people by the end of the first week are counting in on the
account balance after the EMI for loans and credit card bills generated largely
over weekend entertainment and shopping have been paid off. It is not uncommon
for some of the people around me looking for a hand loan or simply saying “I’m
a little tight this month” after the previous month’s extravagant spending
spree.
Savings and financial planning has been one of the essence
towards development of human civilizations. The hunter-gatherer was a wandering
person who ate when he found food or hunted and hence never cared for saving
any for a day when it was difficult to find any. Planning for future was one of
the first things that came in on giving up a wandering lifestyle and settle at
one place. I would like to speculate that start saving for the future and get
into financial planning is the underlying meaning when parents say, “You need
to settle down in life”.
Saving for the rainy day is something we are taught as
children with dropping in coins into a piggy bank being the initiation. As
years go by, we are given a pocket allowance and unknowingly we start saving in
all possible places to indulge into that stick of orange lolly which mom never
approves of. As monetary needs grow, so does our allowance and in most cases,
we still hunt for that opportunity to save towards our desire list. The allowance
continues as we grow up and go through college right until that first job which
signifies the arrival of an era of financial independence. In most cases, we
tend to earn much more than what we have got as allowance and ideally this
should result in greater saving. But today, it is consumerism that kicks in
here and as a result, most people do not care for the rainy day any more.
Just because I’m writing this does not make me a person on
the righteous path. Though my parents had initiated a Public Provident Find
(PPF) account way before I got a job, my initial contributions were about Rs. 5000
per year for the first five years. The idea of fixed return insurance sounded ridiculous
as it demanded me to invest a month’s salary every year to live with a huge sum
in my account 25 years hence. Also, since I was nowhere close to the taxable
income bracket, having money in my account and earning 6% p.a. on it sounded
cool. Stocks and bonds sounded cool but you really need to be tracking the
market for day trading or have cash in excess for possible long term gains. At
most, a fixed deposit to get 8.5% p.a. was the highest level of growth related
investment I went for.
I guess 2008 was a year with a turnaround as all of a
sudden, tax on income became a concern and investment under section 80 suddenly
became important. Even then, my focus was that balance where I minimized taxation
and had the cash to spend as well. Investing 50K to save 15K in tax at times
did not make sense. Today when I look back, it is actually a revelation that while
it did save me tax, the investments are actually going to make an impact on
available funds in the years to come as they contribute through interest and
dividends. Investing 15K per year in a policy for 10 years is likely to give me
a return of 3 lacs on maturity while saving me tax as well. Bottom line, a
policy which will double your saving after a period irrespective of what
happens around you is definitely worth it.
Another area of uncertainty is our health and wellbeing. As long
as I worked with corporate establishments, my employers gave me a Mediclaim and
Accidental insurance policy. I never bothered about the value for the same as
it was one less thing to bother about. Most people are under similar feelings
and never bother to get policies for themselves. But that’s the fatal flaw. A
Mediclaim above 45 requires pre-screening medical test and a policy cannot be
taken up after 60 years of age. As I for see, most of my generation will have
aliments much before this age and company insured coverage of 2 lacs or
accidental cover of 5 lacs is hardly going to make sense. Also, very few people
would be aware that Mediclaim can entail cashless benefits of up to 8 lacs and
that accident insurance policy can safeguard your family to 6 times your annual
income.
If future is going to all about survival, it is for us to
know what lies best in our interest. Corporate policies suggest a feeling of
security, but is it a fact or just an illusion we have of security. All I can
say is we as individuals need to be aware of our needs: today and in the
future. I would not say we need to cut down on consumerism and become over
cautious; but we certainly need to look at investment for the future in some
serious light and not only between Feb-March. We need to exercise the right
kind of tools to be in a condition where we are completely aware of where our
next meal will be coming from. All in all; it’s wiser to be future ready than
keep the future tense.
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