Don’t wait, buy a house early
* Name: Samuel*
* Job: Self-employed
* Age: 35 years
* Dependants: 1
* Income: Rs 6 lakh/year
* Name changed to protect identity
Samuel is an architect by training. He is 35 years old and currently self-employed. His wife works with an IT company as a programmer. They have two girl children, aged 8 and 3 years. They pay Rs 25,000 per month as rent and are planning to buy a house soon. He withdraws Rs 20,000 per month from his self-employment as income while his wife draws a net salary of Rs 40,000 per month. Their household expenses, including school fees, amount to Rs 25,000 per month. They do not have any investments and have a bank balance of Rs 1 lakh. financial goals
He may require Rs 2.5 crore to meet his following major financial goals:
* Higher education expe-nses, which could cost Rs 65 lakh.
* Buying a home worth Rs 50 lakh, primarily out of borrowed funds to the tune of 75 per cent,
* The marriage of his children, 20 years from now, which may cost Rs 30 lakh
* Maintaining current lifestyle post retirement at 60 years, This could require Rs 1.2 crore.
For the sake of this calculation, we assume that medical expenses are met out of recurring income. However, he also needs to take medical insurance coverage. Longevity is assumed at 80 years.
Where does he stand?
The total income and expense per year are Rs 7.2 lakh and Rs 6 lakh respectively. The net income available for saving is Rs 1.2 lakh. The net worth and contingency funds are quite low. There is no medical and hospitalisation insurance currently. Mrs Samuel provides personal accident cover for herself and her husband to the tune of Rs 2 lakh from her present employer.
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