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Five ways to ensure the financial independence of your loved ones

5 MinsAugust 5, 2019

Financial independence gives us the freedom to utilise our hard-earned money the way we desire. It is important for every individual to be financially independent––be it men or women, single or married, teenagers or senior citizens. Being financially independent allows us to take our own decisions, pay for day-to-day expenses, be self-sufficient, helps endure expenses during trying times, accomplish the envisioned financial goals, and much more. It enhances self-morale, makes us feel confident, and adds to our financial security. While you take steps to achieve your financial independence, also ensure that your loved ones become financially independent, too. Particularly those dependent on you --- your children, spouse and parents.

financial independence

Here’s how you can ensure the financial independence of your loved ones:

  • Purchase a health insurance policy — Healthcare is becoming dearer by the day. Hence, make sure your loved ones are optimally insured by purchasing a health/medical insurance policy for them. The health insurance premium you pay on behalf of your dependent parents, spouse, and children entitles you to a deduction under Section 80D of the Income-tax Act, 1961 up to a sum of Rs 25,000. In case your parents are senior citizens, that is, over 60 years of age, the eligible deduction doubles to Rs 50,000. To purchase a health insurance policy, click here.

  • Purchase a preventive health check-up package — Stress, erratic food habits, binging on fast food, occupational hazards, lack of physical exercise, etc, are a risk to health in current times. So, buy a preventive health check-up package for your family. Also note that preventive health check-up packages paid by you for self and dependent parents, spouse and children, also entitle you for a deduction of up to Rs 5,000 as per the provisions of Section 80D of the Income-tax Act, 1961.

  • Activate their internet banking accounts — Introduce your loved ones to online banking, so that they will not need to visit the bank physically for their banking transactions. They can pay utility bills online, recharge mobile phones, and much more –– saving them time, energy and making it easy and convenient. This will be particularly useful for senior citizen parents, especially if they are living in another town as they can become self-sufficient. Also make sure you teach them safe banking practices while carrying out online banking.

  • Provide an ad-on credit card — This can facilitate your loved ones, particularly your spouse and parents, to purchase groceries, medicines, and is helpful in an emergency. The credit card will be offered against your existing credit card. It will have the features of the primary card and you can set the credit limit. It is also a good option for children who may be studying out of town, to use in case of an emergency.

    The Axis Bank credit card can earn your loved ones exciting bargains at malls, supermarkets, online shopping, dining discounts, reward points, and much more! Visit our website to know the grab deal offers on credit card.

  • Invest on their behalf — Deploy the money prudently on behalf of your loved ones depending on the financial goals, the time horizon for the goal, and considering liquidity requirements. Allocate some money for your loved ones when you receive bonuses, annual increment and windfall income. For instance, if you are paying your daughter/son’s college fees next year (short-term); start saving and investing an appropriate sum of money in a Recurring Deposit now. Thus, funds will be available when it is time to pay fees and you also earn interest on the deposit. On the other hand, if you are addressing a goal such as your child’s higher education and wedding expenses, which is 10-15 years from now (long-term), invest in a mutual fund through a Systematic Investment Plan (SIP).

    [Read: Know about SIP Investment]

    Bank Fixed Deposits, (which can also be linked with a savings account), Mutual Funds and National Savings Certificate (NSC) are some investment avenues you could consider based on your time horizon and investment objective. You could also invest in gold as it is a hedge during economic uncertainties. It works as a portfolio diversifier. When you are planning for your child’s wedding, make it a point to buy gold –– be it in the physical form (gold bar, coins, jewellery) or paper form (gold ETFs, gold savings fund, sovereign gold bonds, etc.)

    Disclaimer:This article has been authored by PersonalFN, a Mumbai based Financial Planning and Mutual Fund research firm. Axis Bank doesn't influence any views of the author in any way. Axis Bank & PersonalFN shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.