They say we must have a financial backup ready for about 6 months to meet daily expenditure to say the least.
If you’re in early 30s, saving to the farthest extent for a bright financial future, then you’re on the right track. The idea is to lead a financially stable life, where you’re into a lucrative salary along with your wife. Investing abundantly into mutual funds, with the idle money. You should be doing professionally well and salary graphs should be rising upwards. You must have enough to easily afford small loans. Once you reach this state of life, it’s simple to maintain a healthy standard of living and plan a family ahead. You’re in a comfortable position to stock up finances for emergencies.
Below is the checklist to confirm your financial potential?
It’s good to live by a checklist & find out if you’re doing financially good or bad. This is essentially important before planning a child. It’s possible to make adjustments as and when required. You need to understand that earning a surplus over and above the daily expenditure makes you financially fit. Work to preset your saving ratio and stay glued to it. The ratio must change with the passage of time & income.
Another major point is to that you have enough even when you’re out of employment. You should have saved money upto 6 months’ time. Your investments could include different investment options, devoid of loss of pay and efforts.
Besides, you must have an insurance plan to cover for poor health conditions, life threats, disabilities and more. The insurance plan must be good enough to take care of a child in times of distress.
Next consideration in line would be that there is sufficient cash to cover for expenses in case the spending shoots up. Accumulated cash will more specifically be needed when a child arrives. Or Maybe when you’re done with the current job profile. This decision must be fully planned and must not move their way of living and hamper the household expenditure.
Lastly, what is the outstanding repayable amount and how will it be paid off? If a loan is sanctioned on the ground that the income levels will rise, then it’s good to remember that expenses will rise too. Ofcourse, this will also restrict your capacity to take on extra borrowings if there’s exiting debt.
When you have to assess your financial capacity, a total score is attached to your scenario. If the total score is above 12, then you’re sorted for a child. If the score is less than 10, then you still need to accumulate finances before taking on additional responsibilities, whether it is for expenses, savings or income levels.
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