We all need financial planning to protect our family's future. But some people need it more than others. The life of defence personnel is very demanding, not only for themselves but also for their families which involves long durations of time away from family or frequent moves from one place to another. They are the ones who need financial planning the most. They need to create a comprehensive financial plan which would help their families in situations when they are away on duty .

Steps for financial planning of defence personnel...

Engage with a financial planner:

Only doing investment won't suffice their need, they need someone to review their investments on the path to achieve their goals. A proper financial plan can help defence personnel and their families to feel financially comfortable in there stressful life. Put in place a properly written financial plan and involve your family members equally in all financial planning decisions.

Identify future goals:

A financial planner can help you identify your future goals and achieve them through proper money management. Financial planning doesn't mean only investment. It also includes your liabilities, cash flow, insurance etc. Your future goals should include your children's education, your retirement goals, investment planning with proper asset allocation, insurance planning, etc.

Children's education:

This is one of the biggest goals for all parents. They always seek to provide the best for their children when it comes to education and marriage. However, in most cases the best is expensive. To provide the best education to your children and a lavish marriage, put in place a financial plan.

Is your retirement corpus sufficient?

Most defence personnel after retirement start getting pension so are mainly dependent on it for post retirement life. However, it's important to analyze if that pension will suffice your monthly expenses with rising inflation cost. You should park the corpus amount received on your retirement in proper investment avenues by diversifying the portfolio. And it's always better to start early to the build your retirement corpus.

Have a proper asset allocation:

Defence personnel get various allowances from the government. They should invest the surplus income to plan their family's goals. Also it's important to understand that you are investing for goals and not in products. Defence personnel mainly invest in bank FDs, RDs, EPF / PPF or other traditional avenues for their tax and goal planning. But they need to understand that the return earned on traditional products is usually eaten up by inflation and thus the real return earned is not sufficient to source future goals. So early in their working life they should have high weightage to investments in equities which could help them in long term wealth creation. Take the mutual fund route and use monthly SIPs through which you can benefit from the expertise of fund managers and reduce market volatility .

Buying a home:

Buying a home can be one of the goals so you can consider investing in real estate. But your job would keep you hoping from one place to another. So we recommend investing only in a flat property where you plan to finally settle down post retirement.

Insurance & mediclaim:

Since defence personnel usually lack knowledge of personal finance, they are usually mis-sold insurance products. They already have an insurance policy by government and family's health expenses are also covered, to some extent, by the government. They should analyze benefits given by the government and then buy insurance mediclaim as per the needs. They should not invest in insurance to achieve the future goals or as an instrument for tax planning.

Tax planning:

The purpose of tax planning is to achieve future goals by planning your finance in a tax efficient way where you take full advantage of all exemptions, deductions etc. So invest with an aim to reduce tax liability by keeping factors like age, risk appetite and tax slab in mind.

Conclusion

Due to your background in the forces, you must have built in qualities like discipline, decision making power, research etc. Apply such qualities for your financial wellbeing and manage your money well with advice from your financial advisor.