Role of Financial Calculators in Wealth Planning

 

Financial planning refers to planning the finances that we need to prioritize over the others and save for future expenses. Financial planning has become a very significant part of our lives, probably due to the ever-increasing prices of essential commodities, real estate as well as lifestyle and travel expenses. All these expenses need to be constantly checked and planned for, to avoid going bankrupt.

But how does one estimate the exact expenses over the years that we may need to incur? There are many needs for different age groups. Let us reflect on each of them one by one.

The younger generation form the apex of all expenses as they are developing and harnessing new skills in life. Gen Z as they are referred to, normally falls in age group between 11 years to 26 years. Due to the availability of resources easily, this generation is very actively participating in income generation as early as the age of 11 years by way of social media, video sharing on you tube or music and dance competitions, Olympiads prize winning.etc. They therefore need to invest their earned money to gain stability and assured financial backup at the times they decide to take a break or simply run out of money due to adverse circumstances. Getting high salary package at younger age is also a dominant reason to plan and save your earnings for assured future and provide for emergency or layoffs etc.

Millennials referred to people in age group of 27-years to 42 years, are normally in process of planning for goals like career advancement, travel expenses, House property investment etc.  

Gen-X refer to the people in age group of 43 to 58 years. This age group, we assume, has accumulated a stable position financially, and have savings set aside for emergencies and medications. Their financial needs vary too, with age. They might be planning for retirement corpus and medical and insurance needs which provide safety cover for everyone.

While Boomers mainly age group 59 years and 77 years may have higher medical expenses and it is time for them to reap the benefits of their financial planning. The retirement corpus gives regular income, and they may need to pay for increasing property and personal maintenance and medical bills.

Questions to deliberate upon……….

1.     But how does one estimate the amount to save for the future?

2.     What things does one need to know about his/her financial status?

3.     Can I estimate my future earnings?

4.  What are the interest rates offered by banks on savings deposit, as against mutual funds and other investments returns rate?

These questions will surely sound an alarm about your financial status, while calculating specific needs and translating them in required amounts, sounds too complex.

This is precisely the task for Calculators! We use them all the time!

There are numerous tools available on the internet to help you along the financial planning way. One important tool is the financial calculators.

Financial calculators are a step ahead that help you to exactly put the amounts in different boxes and predict your financial needs accurately and extract a certain amount you need to save or invest or earn.

You will be surprised with the variety of financial calculators available online.

For example, If I wish to calculate my retirement corpus, I need the Retirement calculator.

Likewise, there are Calculators for different financial needs. We can club these into following broad headings:

·       ➤Financial Calculators:

Loan Calculator, Annuity Calculator, PPF calculator, Gratuity calculator, Compound interest calculator, Credit card payoff calculator, maturity amount calculator, interest calculator..etc

These calculators estimate the interest, loan or specific financial formula of say compound interest or simple interest on savings.

·       ➤ Goals Calculator:

Retirement Calculator: How much amount should I save to get rs. 1 crore corpus after retirement?

Education Loan Calculator: How much loan amount should I apply for if I want to do an MBA? So here you might be planning for a specific College MBA. Then you must know the fees, travel expenses, Mess and Hostel expenses if required, daily expenses, etc. to arrive at an amount. The Education Calculator may take in account the inflation rate, and interest rate on Education loan and amount of repayment period you may need to fix for repaying installments.

Insurance Calculator: How much amount is appropriate for my health insurance, if I want to Insure myself? If I have a major disease, or plan for a major surgery etc. that expenses need to be input. The Insurance calculator will determine your insurance needs based on your medical expenses in last one year or last five years. It should also consider the maturity amount you plan to insure for fulfills your medical needs.

Marriage Expenses Calculator: What scale of marriage do I plan? Whether destination wedding that may cost much more than a simple wedding or a court marriage and reception that may save lakhs of rupees. A calculator will therefore ask for specific amounts like marriage hall charges, destination wedding or event management charges, travel charges, clothes and wedding card charges..etc. After inputting them you can adjust them to suit your requirements, thus giving an exact idea of the expenses you are about to make.

 

·        ➤Investments Calculators:

Real Estate Calculator: Based on the term of investment and capital availability this calculator will accurately estimate whether you should invest in land, house, shop/office and returns thereby.

Earnings/Salary Calculator: This calculator will estimate the amount of salary based on your lifestyle expenses and help you assess your financial status.

Mutual Funds Calculator: It will help you to get returns based on number of years you desire to lock your amount and invest in boost fund or growth fund or regular income fund. Few calculators also give the riskometer or the ingrained risk with each of the types of mutual funds.

Tax Calculator :  It will help you sum-up all your taxes like house property tax, road tax, income tax, GST, to help you analyse how much amount is expended each month on taxes only.

·         ➤ ADVICE:

Various trading platforms and demat accounts provide accurate calculators. It is advisable to use the calculators provided by your bank account and demat/trading services provider to get accurate estimate of your past present and future finances. Also, it is important to note here that calculators give a tentative amount of result so that we can get an estimate. Actual amount may differ.

A list of online calculators with link should add up to the excitement of trying one yourself.  So just get, set, Go….!

1.  

1.       https://incometaxindia.gov.in/pages/tools/tax-calculator.aspx

2.       https://cleartax.in/s/sip-calculator

3.       https://www.etmoney.com/tools-and-calculators/sip-calculator

4.       https://upstox.com/calculator/brokerage-calculator/

5.       https://www.hdfc.com/home-loan-emi-calculator

6.       https://groww.in/calculators

7.       https://sbi.co.in/web/personal-banking/loans/calculators

8.       https://upstox.com/calculator/sip-calculator/

9.       https://www.hdfclife.com/financial-tools-calculators/compound-interest-calculator

10.   https://www.investonline.in/financial-calculators/wedding-planning-calculator

11.   https://www.bankbazaar.com/calculators.html

12.   https://play.google.com/store/apps/details?id=com.financial.calculator&hl=en_US&pli=1

 --Prof. Manasi Patil

Indira Institute of Management Pune.

Chief Librarian (Unity/Tapasya Campus)

Email- manasi.pawar@indiraiimp.edu.in