I am 43 years old and my wife is 37. We have a son who is 8 years old and a daughter aged 7. My mother, aged 60, lives with me. My salary is Rs 41,000 and my wife’s income is Rs 22,000. Besides this, we get a business income of Rs 12,000. Our monthly expenses are Rs 40,000, which includes rent and insurance premium. We save Rs 35,000 a month.

Our current assets are Rs 7.5 lakh in PPF, Rs 13 lakh in FDs and Rs 5 lakh in gold. My current EPF balance including employer’s contribution is Rs 2 lakh and my monthly deduction towards EPF is Rs 2,000. Our savings account balance is Rs 3 lakh.

In addition, we have taken an ULIP for Rs 1.3 lakh. Investments in MFs and direct equity are worth Rs 1.25 lakh. Our business assets are valued at Rs 4 lakh. I have a term plan for Rs 20 lakh, while my wife is covered for Rs 15 lakh.

We have a family floater health cover for Rs 5 lakh.

Our jobs do not offer steady growth in income and there is some uncertainty about continuity in employment. Due to our educational backgrounds, getting another job is also difficult.

We want to provide better education for our children. We need Rs 2 lakh each for their higher secondary schooling and Rs 5 lakh each for their graduation. We need a monthly income of Rs 30,000 post retirement. We are eager to buy a house worth Rs 30 lakh and a car for Rs 3 lakh. All numbers are in present value.

— Janak Raj

Financial planning is all about prioritising goals and having realistic targets. In your case, the order of priority should be children’s education, retirement, house and buying a car.

With uncertain incomes it is advisable to avoid long- term liabilities. Buy a plot of a size that more than what you require to build a house. Sell the remaining area at a later date and utilise the proceeds for construction.

Education

The present cost of Rs 2 lakh, at an inflation of 7 per cent (used as benchmark for all the goals) will be Rs 3.2 lakh after 7 years. To reach the target you ought to save Rs 2,460 for the next 84 months and it should earn 12 per cent returns. For your daughter you need to save Rs 2,150 for the next 96 months to reach Rs 3.4 lakh.

For graduation, you will require Rs 9.2 lakh and Rs 9.8 lakh respectively for your son and daughter. If you save Rs 13,650 for the next 108 months, you can reach the target.

For both the goals invest 60 per cent in equity through mutual funds. Once you reach the target, sell all the units and move the proceeds to debt instruments. For the balance invest in the ratio 30:10 in debt and gold, respectively.

Retirement

With your current surplus it may be difficult to fund the goal. As your children grow up, your surplus will dry up further.

Your current annual living cost of Rs 4.2 lakh will be Rs 11.58 lakh at 58. To have such an income at retirement you should have a corpus of Rs 1.8 crore (after factoring your PPF and EPF), and it should earn inflation adjusted return of 1 per cent.

To reach the target you ought to save monthly, a sum of Rs 36,250, till you retire. But you will have a shortfall of Rs 15,000. To meet the target buy a plot with your fixed deposits. If it earns 10 per cent returns, at retirement you can either sell the plot and utilise for the retirement needs or sell partially and from the proceeds construct a house to reduce your monthly needs.

Build a gold portfolio and sell the same for your daughter’s marriage. Keep Rs 1 lakh in your SB account for emergency. Invest rest for conducting your daughter’s marriage.

Increase your term cover by Rs 1 crore to protect all goals.

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