What happens when you type “Apple” or “BlackBerry” on Google? Will you find fruits? No, you’ll see computers and mobiles instead. The world around us has changed a lot in the last few years, becoming increasingly more complex, and this has had an impact on every aspect of our lives.

This holds true in the context of your financial planning as well, because doing your financial planning earlier was a much simpler affair as compared to what it is now.

Financial planning then

Earlier, financial planning used to revolve around fulfilling the basic needs, like a good education for one’s children, planning for their wedding, or constructing a house. Your parents’ retirement planning was secured by a monthly pension because a lot of them were in government jobs and the lump sum they used to get in the form of their retirement benefits like PF or gratuity,  took care of their golden years.  

Buying a car or planning a foreign vacation was completely out of the question. Savings came first,  then spending. Overall, investing money was also a much simpler affair and to top it all, there were hardly any loans which used to be taken only in case of emergency or for building a house or children’s education.  

Financial planning now

Managing finances today is a much more complex affair. Though people are getting much higher salaries or earning well in businesses but ever-rising inflation has made it very difficult to fulfil even the basic needs of buying a flat or arranging money for a wedding. To add to it, the amount of money needed for childrens’ education, the high costs involved for meeting any medical emergencies make it even more difficult. To top it all, most of you may not get any pension either to take care of your golden years.  

Most of the monthly salaries get knocked by the EMIs on flat/car/mobile/TVs and even apparel nowadays, with nothing much left towards savings. If we simply break this in two to three stages then you may find that earlier, people used to earn, save, and then spend. Then the second stage came, where people earned, spent, and then save whatever is left. Now cut to the third stage, which is first spend, then earn and save if anything is left. Interesting, isn’t it? 

Tips on handling these complexities!

Any evolution in terms of lifestyle change should always be welcomed as it makes our life more exciting and interesting, which is good. But you need to make sure that your life is truly evolving and not revolving around these only.

Don’t make the mistake of thinking that you are evolving yourself by buying the next big thing like a bigger house or a car because the moment you own one, you may want the next big one, and that won’t be an evolution but a trap.  

The writer is chief gardener at Money Plant Consultancy

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