Business man needs to draw line between Business and family.

I am 42 and run my own steel business. My wife, 38, is a home maker. We have two daughters (12 and 10). Of late, the receivable from my debtors has increased. I have exhausted all cash savings to run the business and need to save for my children’s education. I have a liability of ?50 lakh, and no term insurance.

Satya

To survive the slowdown, it is pertinent to evaluate your customer’s ability to repay before allowing them credit. As a businessman, you need to draw a line between business and family savings. You ought to invest ?44,615 every month to meet all your goals. But given that you don’t have much surplus to invest, you can consider earmarking some assets towards these goals and taking a loan to meet the shortfall.

The graduation cost of Rs 10 lakh for your elder daughter will be ?15 lakh after six years, if inflation averages at 7 per cent. For this, you need to invest Rs 14,330 every month and this should earn 12 per cent annually (same considered for all goals).

For the second child’s higher education, you will need Rs 17.18 lakh; for this you need to invest Rs 10,740 every month.

If you can recover the money outstanding from your debtors, that can help you meet the target. Alternatively, you can avail an education loan to meet the target.

For your daughter’s marriage, you will need at least ?15 lakh today, which will be Rs 33.8 lakh 12 years from now. You need to save Rs 10,600 every month. Else, you can earmark the land. If it appreciates 7 per cent annually, you will have ?45 lakh. You can use the balance for your younger daughter’s marriage and save ?9,000 every month to meet the shortfall. It is important to have a term insurance given the high liability.

The writer is financial planner and founder of myassetsconsolidation.com Send your queries toblinefp@gmail.com