7 financial planning steps for your father

This year celebrate Father's Day a bit differently and surprise him with your gratitude. Show, you too care about him as much he did throughout his life.

The crucial role of a father is to plan for financial future and spend on child's education, marriage, fulfil goals of a family, etc. Indian fathers though look into financial planning in an unorganised and traditional way. On this special day let's assist him in getting organised in the basic financial planning arena which will play a crucial role in years to come. It will also help him in leading a happy and independent retired life.

Click NEXT to read the 7 financial planning steps for your father

The author is a certified financial planner

1. Compute cash flow statement

The cash flow statement calculates income and expenses. This statement shows the savings on hand at end of every month. This savings can further be utilised in investments. After, analysing the statement your dad can control unnecessary expenses in a month. It can be used as a reference to compare flow of cash in month-on-month basis while reviewing. Keeping, this record handy makes it easier to analyse the financial situation at end of year.

Suppose, if your father is not tech savvy then give him a printed form to fill details and maintain records. You should add these information in excel to compute this statement at end of every month.

2. Looking into debt management

Your dad would have taken loans at various stages of life like home loan, car loan, education loan for his children fees or personal loan to set-up business, etc.

You can help him by compiling equated monthly instalments (EMI) of various loans he is paying. Calculate the time-line to pay off each loan taken. This gives him a better clue on how much he needs to earn and save to pay off these debts.

3. Analyse retirement solutions

During his life, he would have saved the earnings in various retirement products to secure his retired life. These products would be pension schemes, provident funds, etc. Assist him to know the savings in each instrument till date.

Calculate whether this savings are meeting his expenses and goals for happy retired life. You should consult a professional financial planner for further assistance and advice in retirement planning.

4. Analyse insurance deeds

Nowadays, the rising inflation impact medical costs. So, it's a must to have medical insurance coverage for all family members.

Maintain a record of each medical policy with its coverage and premium paying dates. So, he renews the policy on time and it doesn't lapse. Also, analyse the life insurance policy of your dad.

There is easy-to-use insurance calculator on InvestmentYogi website. Here, you can compute the sum assurance required and match the figure with policy taken. If there is short fall in sum assurance then recommend him to increase the sum assurance in this policy while renewing to secure family expenses and pay-off of debts in any unfortunate event.

5. Maintain the record of his investments

It's very common among older generation to invest the amount in fixed deposits for certain time-frame then forget to withdraw or renew when term gets over. Also, they don't maintain proper records while investing in equity.

Explain to your father the importance to maintain record of investments and tracking the performance of all investment products. Further, if you have the skills then analyse his investment decisions considering risk appetite and goals.

Also, explain the asset allocation and performance of these investment products time-to-time. Alternately, recommend a financial planner to look into investment planning decisions. They can guide your father to achieve set goals in prescribe time-frame.

6. Explain importance of estate and succession planning

Explain to him the importance of estate and succession planning by arranging a meet with a lawyer. This professional would frame an estate and succession planning based on input and recommendation from your father.

7. Maintain one point of reference

Most fathers in India don't maintain one point of reference to preserve important documents like insurance policies, investment records, payment receipts, loans, bank account details, birth certificates, marriage certificate, driving license, PAN card number, tax filing records, etc. So, it's difficult to fetch certain information / documents when required urgently or while filing a tax.

You should recommend maintaining a file for each subject area and keep them in a section folder by giving prescribe tags. Following this pattern would keep the documents in organised way.

Also, maintain an emergency diary with important contact details at one place. These contacts must include family members, family doctor, insurance advisor, financial planner, tax consultant, medical stores, nearby hospital, ambulance services, etc. Maintaining these crucial contacts in a diary makes it easier to approach right person at right time during critical situations.

Executing these 7 points would be appreciated by him. You need to review things once in a month and keep regular updates whenever situation changes. There are circumstances wherein, he may not able to adopt on keeping record or following such things so keep assisting him for better future.