Financial Planning Importance- Real life case study

I had quite an experience today-- met with an aquantaince who is going through a bad time in life... Health, job, family-- All in dire straits.

What does not help is that he does not have a strong financial kitty available with him to tide him through these tough times.

With no regular income coming in, and no job forseeable in the future, his financials are going to go completely down the drain

He needs to pay multiple things which he has bought on debt.

1. House EMI of 30K
2. Car EMI of 20K

With him not being able to pay the EMI's these will get sold off by the financial institutions.

With him having lost his job-- even his medical Insurance coverage is no longer applicable ( wonder why we assume that only company Health Insurance is enough).

What lessons does this experience give us.

1. Ensure your money is not stuck up in illiquid assets only-- eg house-- it will take a long time to sell of the house. Have a BALANCED portfolio
2. Ensure you have sufficient Emergency funds available--AT LEAST 6 MONTHS!!
3. Have a medical insurance coverage beyond the company one.
4. Really Evaluate investment income or passive income--- in this it could have gotten him out of this hole.

A really tough experience yesterday--- but hopefully he will get out of the issues he is faced with and come out on top.

Ensure you implement a plan immediately!



Happy Investing!

Comments most welcome..