Being prepared in advance means less worry in future
expenses are often a cause of anxiety if they are not planned in advance. Strife between couples because of money matters is also not uncommon. But Mumbai-based Anusha Ramaswamy and Shyamprasad P. managed to avoid all these just by planning in advance. Here’s how.
Even as a young bachelor, while Shyam would spend all he earned, he knew he wanted a structured financial plan because he wanted to start a business of his own at some point and wanted to be prepared for the financial vagaries this may entail.
“I knew that when I started (planning finances), I wanted to do it right.” So, he decided to consult an expert. And he was sure he didn’t want to go to an “agent”. “I can’t wrap my head around people buying products from someone who gets a commission from it,” he said.
Before getting married, Anusha and Shyam worked for the same headhunting company. “We discussed our financials. But so many discussions snow-balled. So we thought we should talk to an expert and start with a clean slate,” said Anusha, who continues to work with a headhunting company.
When they approached Melvin Joseph (who became their planner) in mid-2016, their marriage was already decided and so it got included into their overall financial plan. Thanks to this, Anusha and Shyam were able to plan their wedding expenses.
“This part of the plan was based on our fixed salaries and bonuses,” said Shyam. While the wedding (in Thiruvananthpuram) took place with the support of their parents, the couple paid for their honeymoon in South Africa. The money that they received as gifts was invested in liquid funds.
Ready for business
Their financial plan was for long-term goals as well, especially considering that Shyam wanted to start a business of his own. They wanted to be prepared for this as well. “We did various calculations, even for worstcase scenarios,” he said. As part of this, Shyam created an emergency fund that had money for 6 months’ expenses, when he started the franchise business in June 2017. “I wanted a big-picture asset allocation, so that the move didn’t feel like that big a risk. Basic life events are taken care of. So, if I take on riskier ventures, I know where I stand,” said Shyam.
Having a financial plan also helped Anusha and Shyam be on the same page as far as goals were concerned. “The (first meeting with Melvin) was an eye-opener. We got a spreadsheet that captured everything. I was living with my parents and still had some savings. I also got a view of Shyam’s finances,” said Anusha.
These discussions helped them figure out the goals. The main long-term goals were retirement and children’s expenses. “For these, we have invested in debt funds and SIPS (systematic investment plans) in equity funds,” said Anusha.
She also used this opportunity to move to direct investing. Anusha had SIPS from earlier as well, but through a broker. “This was a person who had been dealing with me and my family for about 10 years. I realised that I didn’t have to do SIPS through him; I could have done it myself. So, I waited till I got married and slowly moved away (from the broker),” said Anusha.
The couple was also not keen to take on unnecessary loans. “Marriage, car, house… it’s a lot of debt,” she said. As of now, they do not plan to buy a car because “it doesn’t make sense,” said Anusha. “I don’t particularly want to own a house,” said Shyam. But what they do want to do is be able to travel. For this, much of Anusha’s savings, which were parked in savings accounts, have been moved to liquid debt funds. “I needed better returns and liquidity so that I could travel,” she said.
Shyam, who had done a course in entrepreneurship, wants to keep the money aside to pursue other courses. “I now understand the long-term nature of mutual funds. I also learnt about liquid funds instead of fixed deposits,” he said.
Anusha and Shyam have started on a strong footing with a financial plan in place for most of their goals for now, and according to their preferences. “I am risk-averse, and I want to be in a safe zone as much as possible. (At the same time) there is a well-defined plan for Shyam to start his business,” said Anusha. Here’s to happy beginnings.