A survey shows that a substantial chunk of India?s salaried class are under-prepared for future financial requirements and don?t plan savings investments early enough.
Indian salaried class is alarmingly under-prepared for their future financial needs like retirement and emergency fund. Tracking spendings, savings on tax and professional advice were also not given priority by many employees.
Only 6.75 per cent of employees are financially ready to face challenges in life, reports a recent survey conducted by ArthaYantra, an integrated online personal financial service company.
?Based on the current personal financial habits of the employees surveyed, only 18.64 per cent can afford to retire at the age of 60. This also means that the probability of extending the retirement age is higher for the remaining employees owing to lack of enough retirement corpuses. Even for people who can retire at 60, quality of retirement would be sub-par to required standards,? it says.
In general, employees are only thinking and investing for their retirement after their 10 years of work experience. The survey reveals that out of the employees with work experience less than five years, only 9.29 per cent have started investing in a retirement plan other than Provident Fund or other such mandatory retirement related options provided by their organisations.
Out of employees with a work experience of 6 ? 10 years, only 19.23 per cent have planned for their retirement and 29.63 per cent of the employees with work experience over 10 years started investing for their retirement.
Even most of the employees are undermining the importance of saving money for emergencies. The current state of the employees would push them to encash their existing investments or assets in order to fund their emergencies.
The scientific practice of personal finance advices an emergency fund which accounts for 3-6 months of expenses. Managing an effective emergency fund stands out as one of major risk management techniques.
As per the survey, 14.22 per cent of professionals with a work experience of less than 5 years have an emergency fund which can account for the expenses worth 3 or more than 3 months. About 44 per cent of employees with a work experience of 6-10 years have and emergency fund that is more than their three months expenses.
Between the age of 30 to 45 years, an individual faces an average of three emergencies and possibility if him/her undergoing financial distress is very high.
The critical step of saving process is identifying the spending patterns. Once the patterns are identified, it is easy to determine the areas which need attention.
However, based on the survey conducted, only 26.26 per cent of the employees are maintaining a healthy frequent track of all their expenses. Only 10.61 per cent of the employees review their expenses frequently. The majority (42.93 per cent) review their expenses occasionally and 20.20 per cent review them rarely.
Most of the investment mistakes made can be attributed to lack of proper research before investing. Often employees are making their investment based on the advice of friends and colleagues and also by feedback back by parents. Only 4.2 per cent of the employees are seeking financial advice from an expert before making any investment.
Personal finance tips
- Efficiently track cash flows
- Cut down unnecessary spending by tracking
- Saving Tax by various
- investments
- Planning the investments for future needs
- Investing for comfortable
- retirement phase
- Planning for unforeseen events
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Category: Business, Business News
Source: http://postnoon.com/2013/03/14/qualified-advice-pays/114005
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