A plan for an IT professional with dependents

Kabir (27) is an IT professional and has a monthly in-hand salary of about Rs 1 lakh. His wife is a homemaker. They have a baby girl and live in their own house. The family's monthly expenditure amounts to Rs 50,000. This also includes a home-loan EMI of Rs 18,000. Kabir has been an avid investor and also received a sizeable amount of money from his grandfather few years back. This has helped him accumulate a corpus of Rs 14 lakh, which is spread across the Employees' Provident Fund (EPF), equity mutual funds and National Savings Certificates (NSC). Kabir wants us to draw a financial road map for him. Emergency fund Kabir does not have an emergency fund. An adequate emergency corpus, which is equivalent to at least six months of expenses, including EMIs (if any), is the foundation for a financial plan. It supports you during any unforeseen financial emergency. In Kabir's case, the emergency corpus works out to be Rs 3 lakh. It should be maintained in a combination of sweep-in deposits and a short-duration fund, which will help him earn higher returns without compromising on liquidity. For this, Kabir can set aside some amount every month from the surplus in his income. Action: Create an emergency corpus of Rs 3 lakh. Health insurance Besides a health cover provided by Kabir's employer, he has an independent family-floater plan of Rs 5 lakh. Both plans cover his wife and his daughter would be covered as soon as she turns 91 days. This should be

This article was originally published on October 20, 2021, and last updated on November 09, 2022.