Everyone has different life goals they wish to accomplish at different life stages. Once you start earning, you begin to set aside a part of your income for the same. However, while you are planning for your future, it is important to also plan for emergencies. Emergencies can happen suddenly and having the proper financial backup for it is imperative. While you can begin by investing in life insurance, you need to have different options at hand to plan for different life risks. Here are some tips to help you do that.
Earning stage
Once you start your first job and start earning, budgeting is the critical financial skill that you need to master. Develop a suitable budget and learn to live within that budget in order to avoid overspending. Understanding your expenses and fitting them in your income allows you to focus on creating savings. Put more emphasis on creating an emergency fund for you and your loved ones. Next, start investing little by little while keeping your future in mind.
With the growing number of health problems, it is imperative to invest in health insurance. The cost of healthcare has also increased in recent years, so having a health insurance policy helps you manage the cost of hospitalisation. If your parents are senior citizens, you can opt for a senior citizen health insurance.
Family stage
When you get married and start a family, you need to realign your budget accordingly. As there will be dependents on your income, you need to safeguard them from life risks. Therefore, life insurance is a critical element for security. You should consider term insurance due to its affordability and tenure. With a growing family, it is imperative that you include them in your health insurance cover as well. Keep in mind the increase in the expenses and revise your budget accordingly. Make changes in your investment plan and diversify your portfolio. You can approach a financial advisor to get a better idea about your options. If you have any outstanding loans, make sure you plan their repayments accordingly.
Saturation stage
At this stage, you are nearing your retirement while your children are growing. As your income may have reached a good growth level, you can now focus on building a retirement corpus. With an increase in age comes a low-risk appetite. Make changes accordingly to your investment plan. Emphasise more on savings and less on riskier investments. There are also the expenses of your children’s education. Having enough savings put aside for that is important. Similarly, as you grow older, there are different health ailments that you could develop. Going for critical illness insurance can be beneficial. If it is required, you can also change the nominee in your insurance policy.
Retirement stage
Once you retire, your savings and income from investments help you live a peaceful life. However, you should be aware of your health issues along with those of your loved ones. Make sure you keep your policy updated and increase the sum insured if required. If you have any outstanding debts that are being repaid, the sum assured from your life insurance might help in repaying that in your absence. Also, investing in safer schemes with low risk and consistent returns can be considered either for you and your partner or your children. Avoid investing in financial products with high risk factors as it could impact your savings.
Conclusion
These tips can help you create a good financial plan for the different life risks that you might come across at the different stages of your life. You can discuss with your financial advisor to get more information about it. If you wish to buy a term plan and want to know the cost of it as per your requirement, you can use the life insurance calculator.