Assess your lifestyle

Madhu (38) is a single mother of a five-year-old girl. She works with a private company. Her monthly take-home salary is Rs 1.5 lakh. She lives in her own house and has accumulated around Rs 85 lakh. This amount is spread across fixed deposits, equity funds, stocks, Public Provident Fund (PPF) and Sukanya Samriddhi Yojana. Besides taking care of her retirement and daughter's education, Madhu plans to go on a vacation abroad and buy a new car. She would also need some money in a couple of years for the general maintenance of her house. She wants us to draw a financial road map for her, keeping in mind all these goals. Emergency fund Madhu's monthly expenditure is Rs 80,000. The ideal emergency corpus should be equivalent to six months of your expenses. This works out to be Rs 4.8 lakh in her case. Madhu has Rs 30 lakh in bank fixed deposits. A part of those can be used for creating the emergency fund. However, instead of maintaining the emergency corpus purely in fixed deposits, a combination of sweep-in fixed deposit and liquid funds should be used. Doing so will help her earn higher returns without compromising on liquidity. Action: Use a combination of sweep-in fixed deposit and liquid funds to maintain your emergency corpus. Insurance Madhu has a health cover of Rs 15 lakh, which also covers her daughter. It is sufficient for both of them. However, she does not have a life insurance. An adequate life cover is essential for anyone with a financial dependent. Madhu's five-year-old daughter is dependent on her. A life cover of Rs 1.5 crore would be suffi

This article was originally published on September 15, 2021, and last updated on August 24, 2022.