“Hey Sheela, What’s up? You don’t look your own self today!” asked Arun cheerily.

“Arun, I somehow cannot get Savita and her two children out of my mind. Don’t know how they will make it through the life now with Sushil gone last week in that fatal accident, I don’t think Savita has any idea about how to manage her financial life. And the children are just too young to even realise what tragedy has befallen them”, Sheela replied sadly.

“I agree with you Sheela. When we find our comrades, friends or close acquaintances going away like this, one is brutally struck by the fickleness of life. But then life has to be lived, and time has to heal the wounds”, opined Arun.

“Still Arun, how can one reconcile to such a great tragedy of life?” Sheela replied.

“Sheela, what you’re saying is true from an emotional and physical point of view. Nothing said or done can make good the loss of a loved one. But the lady has to pick up the threads of life. There’s no doubt that there is an excellent emotional and physical support structure available in the armed forces, but then the fact also remains that there’s a serious dearth of informed financial advice available to them”, said Arun bluntly.

Sheela still insisted, “I agree with you to some extent, but remember that a large amount of money suddenly becomes available to the ladies in such circumstances. Most of them may have never handled money in the past, never operated even a bank account.”

Sheela prodded, “Then what do you think can be done by such ladies?”

“Sheela, the very first and foremost action is to prepare a personal Will, having seen the vagaries of life herself first-hand. It should preferably be registered in a court. The appointment of a good executor in the Will is extremely important. Next important issue is taking adequate term insurance as per own future requirements, primarily relating to those of the children. Insurance of home loans, house properties, car and other important assets is also equally important”, rattled off Arun.

Sheela counted, “Preparation of Will and taking adequate insurance cover, preferably Term Insurance Plan, is what you’ve said so far.”

“That’s only the start point. The lady then needs to list out major future requirements along with their current costs. These requirements, in most of the cases, are likely to be children’s education (graduation and post-graduation), their marriage, purchase of a house or payment of existing home loan instalments, own retirement living, vacations, change of car periodically, etc. The current costs are to be increased realistically by a yearly compounded inflation rate till the requirements are likely to occur so as to get an idea of what will those requirements cost when they actually come up”, listed out Arun.

“That certainly is a lot of work, Arun”, felt Sheela.

“But much less than the hardships that will have to be gone through if all this is not done”, said Arun, and continued, “Then try and figure out whether their savings will match up to those figures, taking into account the increased incomes and expenses over the years. They need to see if the equation ‘Income – Expenses = Savings’ can be changed to ‘Income – Savings = Expenses’, since keeping expenses in check and meeting future obligations will be crucial now. If the pension received monthly is more than own requirements, some part of it should also be saved on a monthly basis”.

Sheela butted in, “But Arun, the biggest immediate issue is, what to do with the large amount that is received as compensation from various sources and how to ensure that it lasts”.

“Agreed Sheela. The lady needs to invest the received compensation amounts very carefully. Few rules of thumb – keep emotions out of investing; invest as per her financial goal requirements within her risk comfort zone; go into safer debt investments for requirements occurring in next 2-3 years while longer term requirements should go into equity related investments; tendency to go in only for ‘safe’ investments could be detrimental to her future requirements; Real estate and Gold should be taken only on as-required and if-required basis; And insurance as an investment should be totally avoided”, blurted out Arun, as if on a cue.

“And”, Sheela interjected, “take unbiased and professional advice if you feel to since it could make a lot of difference to your family’s future. Last but not the least, your own confidence, Will and steely resolve to deal with the turbulence of immediate phase of life is what will ensure that you survive the ordeal for the sake of your children, your other near-and-dear ones and your own self.”

Today’s Learning!

Passing away of your husband is a rude shock. But let it not be the end of the world for you. What your children do in their life now onwards depends entirely on YOU and literally nobody else.
Don’t be daunted by the task ahead or the large amount of money that flows in to you. Handled properly, this money can help you realise your late husband’s dreams, especially in regard to your children.

Preparation of a Will and taking adequate term insurance cover for yourself, are two immediate steps required.
Figure out your future important requirements and invest your money sensibly to reach those financial goals. Scrupulously follow the Do’s and Don’ts given above.

If you feel the necessity, do not hesitate to approach a good financial planner to help you. Treat him/her as your financial family doctor.