How Do You Plan For The Surprises That Life Throws At You?

Shivang Malhotra, 36, and his wife Pooja, 35, were gliding through life, assuming they have it all under control when the news caught them completely unaware. They were expecting a child! After having tried for a while and trying to plan for it, they had made peace with the routine, but never stopped hoping. “Life’s like that, that’s its beauty. You can never be prepared enough.

We both are working professionals and we have checked a lot of tick boxes for our finances, but no amount of planning will take care of everything. It is a continuous process. In a way, because it was so unexpected, it is more beautiful”,

says Pooja.While Pooja has her own furniture design studio, Shivang belongs to the 3rd generation that has inherited their family-owned business. Being entrepreneurs, one of their biggest challenges is not having a constant inflow of money. Pooja has a more niche design work and partners with a childhood friend for her business of 9 years.“Ours is a smaller setup, and it was more about creating a kind of work that satisfies me. We work with craftsmen from all across the country, and since most of these people are on daily wages, our bigger concern is to keep their money inflow constant. Since we cater to a niche market, we work on advances and are pretty much self-funded. Debt has never been a requirement.”

The excess money is either invested or kept as savings, since they need working capital for trade shows

etc. Having said that, the ultimate dream for her is to have a store of her own where showcasing of their work is on priority.On the other hand, Shivang’s printing press business is a bit more regular in nature but again, has the peril of getting obsolete since more and more people are going paperless. “We have to keep up with technological advances. I moved us to digital printing from offset printing.The verticals are fast-changing but increasing, so even if the mass-scale production work has gone down, there are more and newer opportunities to explore.” The onus of running the house lies on Shivang and Pooja’s income is viewed as a surplus. The working capital requirement in his case are much higher because of the evolving nature of his business and for that, he prefers banks. He would not mind trying out NBFCs but that is an area yet to be explored.It is quite interesting to figure the financial planning aspects of individuals who are not traditionally salaried and yet lead lives just as routine as the rest of us. How do they fund their expenses? How do they save? Do they make joint investments? Who funds for their working capital needs? Shivang and Pooja have had a very practical approach to investing till now, but now with the baby coming, both their approaches to life and financial planning may need tweaks.Shivang says, “We had made the hygiene decisions like buying a health cover. Unfortunately, our insurance doesn’t cover pregnancy because this was unexpected, nonetheless, we shall meet the expenses with our savings. We will consider putting some money in an education fund for the child’s higher education since it is not getting any cheaper. We are trying to figure out more options.” To this, Pooja adds, “Of course,

we shall do what’s best for the child, but right now we are enjoying this lovely phase; am sure planning will be an ongoing process.”

Both Shivang and Pooja want to take it as it comes and make the financial decisions later as the need be, but they are clear on moving towards a joint model of investing for the child.Right now, the financial responsibilities of both are divided and set. While Shivang provides for the regular expenses, Pooja saves for the rainy days and vacations etc. Shivang invests more in mutual fund schemes but via the lumpsum method because of the bursts of income; however,Pooja diversifies across FDs and mutual fund schemes but mostly through SIPs. They both have different financial advisors whom they consult, come back and exchange notes to ensure that their investments don’t overlap. Shivang has insured his premises and business, Pooja aspires to but is yet to do that.“Whether it is parenthood or financial investments, there is a lot to read online and figure for yourself. There are apps that help you track fitness goals, monitor your baby’s growth, and also to check fund performances. You need to know how to filter out the information relevant to you and not follow anyone blindly”, they muse.The interesting trend here is to note that

an independent working woman of today does not feel the necessity of changing her financial advisor or aligning herself to her husband’s investment strategy, necessarily.

Shivang and Pooja are satisfied till now following separate investment approaches but are more inclined towards a middle path when it comes to the child; however, what that middle path shall be, is something that is still to be decided.There is also a vast difference between how parents approached having a child in our parents’ generation and how it is seen today. While there was a lot of focus on the child, little heed was paid to one’s own desires. But Shivang and Pooja are very clear on this aspect. “The responsibilities will be shared, and I will be a more hands-on father, there is joy, and merit in that”, Shivang says.While Pooja plans to take a few months off to care for the baby, Shivang’s role will be more need-based because he is the primary provider for the family, and when you have your own business, you can’t really apply for leaves.“Money is important to tend to your needs but in the rat race, we forget what’s more important is to spend time with family and friends, develop yourself. It is not the end, only a means”, Shivang says. Pooja is on the same page, “Just earning money and putting aside isn’t enough. You must learn how to use the money you earn to enjoy the moments, travel, work on your passion, buy certain things etc.”While the uncertainties of life continue as-is from the previous generation to this, the current generation is certainly more accepting of the challenges and more confident about facing them head- on.

• Gone are the days when husbands used to step out for work, while the wife took care of the children and household. With the standard of living rising day by day, it has become essential for both spouses to work so as they have enough disposable income to lead a good lifestyle.
• When it comes to financial planning, couples who own separate businesses can find it tough to manage excess money. They have to look after working capital required for business, income for staff, etc. Although some couples may not be financially prepared to start a family, and lack of planning on this part can put your finances in a mess. Just earning money and saving it is not enough; couples require detailed planning for the money to work well. Some of the important financial goals married couples need to do it right away if they are planning for a child soon:
• Buying a health cover: A common mistake married couples do is ignoring the need for insurance. Health insurance needs to be a priority in today’s age with skyrocketing healthcare services. The need for medicare can arise at any time. In such a situation, health insurance can be your savior by offering compensation for medical expenses.
• Child Education plan: Higher education costs are shooting up with rising inflation. Securing the educational needs of your child is extremely crucial in the current scenario. Instead of a regular savings plan which could be insufficient in building the required corpus for your child, a child plan can adequately protect your child’s future needs.
• Investments in FDs / mutual funds: Married couples today prefer making decisions when it comes to investments. It is necessary for both spouses to actively invest in financial instruments like mutual fund schemes or fixed deposits to build a considerable corpus that will last post-retirement.
• Post marriage, couples mostly take individual decisions while exploring new investment avenues. However, if they are planning for a family, they need to consider child education, health cover, and other financial plans.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.