Are you financially secure?

Today, I decided to take a break from pretty pictures and share with you all what I have learnt over the past year from my interactions with several women on how comfortable (or not!) they are discussing about money. Yes, it’s time for some reality check, and I sincerely hope this will motivate you to take a rain check as well.

I deliberated for weeks before writing this post and then thought, “what the heck?”. This marries two of my interests/career options so why not talk about both. I started “She Can Invest” last year in a pursuit to educate women, and instill the confidence in them to participate in their family’s financial planning decisions.

As part of this, I conducted workshops regularly with women as my core audience. The funny bit, though, was that men felt left out and wanted to be a part of these workshops, eventually constituting 25% of the audience. In these workshops, I refrained from selling or recommending any specific product, mutual fund, or insurance as I felt the objectivity would be lost.

My objective with this post is to share my observations and their apprehensions. If you feel like the word finance or financial planning overwhelms you, then take heart. You are not alone.

“Finances is the second most contentious issue in marriages today. First is sex.”

I’m just going to ask you two questions with the hope that it will make you think.

Question 1: is the income earner of your family insured?

Only 25% of my audience had a traditional life insurance product, and that too, because they believed it would earn them some handsome returns. The product chosen was not with the goal of insuring their lives if something were to happen, but to seek a return when the policy matured.

And, believe me, this is the biggest mistake you can ever make.

90% did not know what term insurance was and how it was different from life insurance.

Why do people shy away from this product? It’s because you pay a premium every year and you don’t get any return on it at the end of the year. But, if something were to happen to you, then your nominees will get the payout. Let me illustrate with an example. Let’s say your annual income is 10 Lakhs and you insure yourself for Rs. 1 crore. You pay a premium of let’s say, Rs. 25,000. If nothing happens to you, this 25,000 is gone. But, if something happens to you, your family gets paid 1 crore.

Why term insurance?

Because it’s the only product that does the job it is intended to. To insure your family. For investment, there are better products such as mutual funds. Do not confuse the two.

If there is only one takeaway you intend from this post, then let it be this. Get yourself a term insurance, typically, 10 times your annual income.

Question 2: do you know if your money is managed well and how?

If your financial planning is sound, whether by you or through a professional planner, then my guess is you already have a term insurance going.

Stashing money in fixed deposits in January, or investing in second and third homes for rental income is not financial planning.

Still wondering why, you need to plan?

Because life is full of surprises. I have seen so many untimely and untoward incidents in the recent years, that it doesn’t surprise me anymore. You can only be financially savvy to weather the rough phases.

65% of respondents to my survey said their spouse or parents managed their money.

My question to you is: do men know it all?

Sometimes, yes. But, often, they just pretend to.

It’s time you shed your inhibitions and become an equal partner with your spouse/parent in money decisions. There are many avenues/apps available today to rein in your finances: budget well, save before you spend, and invest the money that you save instead of letting it sit idle in the bank. Finally, ensure your insured.

This post is in association with Aegon Life.

About Aegon Life:

With a complete product suite of life insurance plans, superior technology, and customised service, Aegon Life Insurance Company Limited launched its pan-India operations in July 2008. As a joint venture between Aegon – world’s leading financial services and Bennett, Coleman & Company – India’s leading media house, Aegon Life Insurance adopts a local approach to facilitate customer interaction. Our vision to be the most recommended new age life insurance company has enabled us to leverage digital platforms that bring transparent solutions to customer needs. Our financial planning and investment solutions include term life insurance plans, pension plans, unit-linked insurance plans (ULIPs), health insurance plans, child education plans, and more.