A couple with stable incomes approached Geojit’s Certified Financial Planner for expert advice on balancing multiple financial priorities—buying a new car, funding their children’s education, planning for a wedding, and leveraging their surplus income effectively. Geojit’s Certified Financial Planner, Gibin John, outlines a practical strategy to help them allocate resources wisely, minimize idle funds, and stay on track toward their long-term goals.
I am a 40-year-old government employee, and my wife is 39 and works for a private firm. I receive a net salary of Rs. 75,000 per month after all deductions, and my wife earns Rs. 60,000. We have a son aged 8 and a daughter aged 6. Our monthly living expenses are Rs. 50,000. Currently, we are investing Rs. 20,000 per month in a recurring deposit (RD), which will end in February 2026. The estimated maturity value of the RD is Rs. 5.25 lakh. We also have mutual fund investments worth Rs. 3 lakh, Rs. 10 lakh in bank fixed deposits, and Rs. 2 lakh in our savings account.
Our immediate goal is to purchase a new car worth Rs. 15 lakhs. Additionally, we aim to accumulate Rs. 25 lakh for the higher education of each child. We plan to create a corpus of Rs. 50 lakh for our daughter’s wedding when she turns 27 years. As I am a government employee, I will receive a pension after retirement; therefore, we do not need to plan separately for retirement. Please advise us how to manage our investments for achieving life goals.
Gibin John, a Certified Financial Planner replies:
As a government employee, your job security is a positive aspect for your overall financial plan. Your total family income is Rs. 1,35,000 per month. After deducting living expenses of Rs.50,000, your investable surplus amounts to Rs. 85,000. From this monthly surplus, you are currently investing Rs. 20,000 in a recurring deposit (RD). The remaining Rs. 65,000 is either being invested without a specific objective or lying idle. A structured financial plan can help you allocate this surplus effectively.
First, you should create a contingency fund to meet any unexpected expenses. For this purpose, you may utilize the Rs. 2 lakh in your savings account. This amount will be sufficient to cover approximately four months of expenses in case of an emergency. Instead of keeping this amount in a savings account, consider parking it in a liquid mutual funds, which offers better returns while maintaining liquidity.
For your immediate goal of purchasing a car worth Rs. 15 lakhs, you may utilize your existing investments such as the RD maturity amount and part of your fixed deposits.
Children’s education is another important goal. Assuming an inflation rate of 8%, the current estimate of Rs. 25 lakh for each child’s higher education will grow to approximately Rs. 50 lakh for your son in nine years and Rs. 58.30 lakh for your daughter in eleven years. To achieve these targets, you should invest about Rs. 26,500 per month for your son and Rs. 22,500 per month for your daughter in equity-oriented mutual funds, which have historically delivered 10–14% annualized returns.
For your daughter’s wedding, you have estimated a cost of Rs. 50 lakh, which will rise to approximately Rs. 1.70 crore, assuming 6% inflation. To achieve this goal, you need to invest about Rs. 16,500 per month in equity-oriented mutual funds until she turns 27-years-old.
After your RD matures in February 2026, you may redirect this investment of Rs.20,000 per month into debt mutual funds. Considering your age and financial goals, you may allocate 80% in equity-oriented investments and the balance in risk-free investments for long-term growth while maintaining some stability.
As a government employee, you will be eligible for a pension, so there may be no immediate need to accumulate a corpus for retirement. However, after achieving your other financial goals, it is wise to continue investing to create an additional retirement corpus. This will provide greater financial flexibility in later years.
Finally, ensure adequate protection for your family. You should take a term insurance policy of a minimum of Rs. 1 crore to protect your family. Additionally, opt for a family floater health insurance plan with a coverage of Rs. 10 lakh to safeguard against unexpected medical expense.
