FIVE MUST HAVES IN YOUR FINANCIAL FIRST AID KIT

When it comes to our medical health, we leave no stone unturned. The first- aid kit is usually armed with all the necessary medicines. But talk about financial first-aid kit then everyone is not sufficiently equipped.
Given below are 5 must haves in your Financial First Aid Kit

EMERGENCY CASHEmergencies could be anything from serious medical conditions to a sudden setback on the job front. Emergency cash is a must-have in your portfolio. How much one should set aside for this really depends on each one s income and lifestyle. Around 3-6 times the monthly expenditure can be kept in a liquid asset like a bank deposit or liquid funds as an emergency pool.

MEDICAL INSURANCE AND LIFE INSURANCE
The former is for your life and the latter for your dependents. You need to have a medical insurance policy in place, not just because it gives you a tax break, but because it is the best way to fund your medical expenses. Taking medical insurance early on in life is an advantage because you have the benefit of good health on your side. Most insurance companies cover pre- existing illness only if you have had a policy with them, for more than five years. Also make sure you renew your policy on time.

In case a policy is not renewed in time or if there is any gap while renewing it, the policy will be considered as a fresh policy and whatever exclusion apply in the first year of the policy will be applicable.

You also need adequate life insurance so that your financial dependents could invest the money and live modestly on the proceeds. So go ahead, and find out how much insurance cover you actually need.

CHILD s EDUCATION FUND
Start planning early for your child s future. While you may not know exactly how much you ought to save, you could look at setting aside small amounts every year. Here you need to ensure a good asset spread, which provides an adequate asset safety and growth. For a medium risk person, a spread of 40:60 or 60:40 in debt to equity is acceptable. At the same time, one must maintain a good mix of liquidity and flexibility.  Find three best places to invest for your child.

RETIREMENT FUND
This is the most ignored reserve in all financial plans. Nuclear families are in and so are longer life spans. Inflation and escalating medical costs will also be always around. Therefore, you need to build up a corpus that will not only take care of routine expenses but also provide for extra health care costs that you may incur. You need to have a corpus of funds, which will give you close to 100% of the salary you enjoyed while working, to maintain the lifestyle you are used to.

The ideal way is to devise a professionally counseled and well managed asset allocation portfolio. Typically, for a 25-45 year age band, the accent should be on equity investment. The amount to be invested in equity should necessarily be determined by the risk appetite of the individual.

So have you planned your retirement?

MAKE A WILL
If you die without making a will, your family will have to follow certain "laws of succession" in deciding how to split your assets. It is a misconception to believe that all the estate is automatically passed on to the spouse. Children and relatives can also stake claim to the properties. Laws of inheritance and succession are diverse and complicated. Making a will is sensible because it leaves you to decide how your wealth will be used. But unfortunately, most Indians simply forget to make a will.